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>"Airlines are very much currently burdened with a legacy that was cemented in sometime in the 50's." Which legacy exactly are they "burdened" with? The airlin

>"Airlines are very much currently burdened with a legacy that was cemented in sometime in the 50's." Which legacy exactly are they "burdened" with? The airlines in US were deregulated in 1980s. The airlines look nothing like they did in the 1950s. The regulatory regime is gone, there's "power by the hour", fuel futures etc. >"Ultimately, they're given a large multi-dimensional optimisation problem ..." Yes and the airlines have pursued a policy of rapid consolidation which means forcing more people through regional hubs which are in no way optimal for their itineraries. >"We are taking the (very small) initial steps in alleviating some of the issues by introducing increased liquidity into the market ..." That is a bunch of double speak. Fixing the problem of overbooking is done by airlines practicing some basic discipline - "stop selling what you don't have." If you are selling seats on an A320 with 180 seats then don't sell 200 seats. In what other industry is selling something you don't to sell done as a matter of course? The problem of overbooking is fixed by not actually overbooking. You are simply enabling airlines to continue this unethical practice of overbooking in a manner that's more profitable to them. I fail to see the innovation.

nanis 9y ago
These days, it's not the legacy. It is mostly regulation pushed by Chuck Schumer[1]. Predictably, the policy has made it much more profitable to outright cancel flights at the first sign of trouble. Add to that the consolidation that occurred since then, we are left with: > Four carriers with over 80% of domestic capacity: > - Three large, hub-oriented, global legacy carriers (American, United, Delta) > - One large, point-to-point oriented ‘low cost’ carrier (Southwest) > Six much smaller carriers, each with less than 5% of the market > - Three smaller, primarily hub-oriented carriers (Alaska, jetBlue, Hawaiian) > - Three much smaller point-to-point travel merchandisers, heavily reliant on ancillary fees, so-called ‘ultra low cost carriers’ or ‘ULCCs’ (Spirit, Frontier, Allegiant) The main legacy are the huge health care and retirement obligations. Baumol (1982) discussed the airline industry as an example of a contestable market[3]. Free entry & exit no longer applies. [1]: https://www.nytimes.com/2009/12/22/business/22passengers.html https://www.nytimes.com/2009/12/22/business/22passengers.htm... [2]: https://www.eyefortravel.com/revenue-and-data-management/us-airline-consolidation-what-happens-next https://www.eyefortravel.com/revenue-and-data-management/us-... [3]: https://econpapers.repec.org/article/aeaaecrev/v_3a72_3ay_3a1982_3ai_3a1_3ap_3a1-15.htm https://econpapers.repec.org/article/aeaaecrev/v_3a72_3ay_3a...
- toomuchtodo 9y ago
  The US airlines industry is a public utility that attempts to operate (poorly) as private corporations.
  - hueving 9y ago
    Not quite because adding new companies and routes is significantly easier than laying new utilities.
    - toomuchtodo 9y ago
      It barely ever turns a profit over the long term was my point.
- bogomipz 9y ago
  >"These days, it's not the legacy. It is mostly regulation pushed by Chuck Schume" The OPs comment was that the airlines were burdened by legacy from the 1950s. Mr Schumer's legislation is quite recent. Additionally the legislation "Passenger Bill of Rights" is quite reasonable - let your customers off the plane after 3 hours of delay. It's pretty easy to avoid that penalty. It's also worth pointing out that legislation was in response to unreasonable practices by the airlines in the first place. I'm not sure why it is even relevant here. >"The main legacy are the huge health care and retirement obligations" How is this relevant to discussion about the practice of intentionally overbooking?
  - nanis 9y ago
    So-called "Passenger Bill of Rights" takes away options from passengers[1]. "We found that for every minute of tarmac time being saved there is, on average, a three-minute increase in the total passenger delay," said Vikrant Vaze, an assistant professor at Dartmouth's Thayer School of Engineering who co-authored the study. Adopted in 2010, the Transportation Department rule requires that passengers be allowed to deplane within three hours of boarding or landing for domestic flights. Airlines are subject to fines of up to $27,500 per passenger for violations. Hoping to avoid fines, airlines have been quicker to pull the plug on flights, Vaze said. That forces passengers to scramble to find another flight to reach their destination, something that has become increasingly difficult as industry consolidation reduces the number of available seats on planes. Flights that are not canceled have to start lining up anew after letting passengers deplane and then reboard, adding to the ultimate delay. "Most of these extra delays are being felt by those exact same passengers," Vaze said. "It's just that they're not on the tarmac." [1]: http://www.chicagotribune.com/business/ct-tarmac-delays-0105-biz-20160104-story.html http://www.chicagotribune.com/business/ct-tarmac-delays-0105...
hueving 9y ago
>You are simply enabling airlines to continue this unethical practice Don't project your morals onto the rest of us. As a frequent flyer who likes to travel I love this practice. It means lower prices overall and it gives me the opportunity to fly for free somewhere else later if I volunteer out. With the switch to real cash compensation on some airlines, I can even make money if I don't feel like using it to fly. I have flown over 2 million miles in my lifetime and I have never seen someone forced to give up their seat. The airlines always enticed people to volunteer out with (sometimes significant) compensation. United behaving like assholes with their forced removal is indicative of their behavior, not the practice of overbooking. I'm fine with increasing required payouts for forced removals to deal with piss poor airlines that don't conduct an auction until volunteers are found, but banning the practice outright is throwing the baby out with the bathwater due to ignorance of the practice.
- bogomipz 9y ago
  >"Don't project your morals onto the rest of us" I'm not projecting "my" morals onto anybody. Intentionally overbooking and knowing full well that you are going to bring inconvenience and stress to people is just plain fucked up. That's not really a grey area. If you bought a ticket to a movie and then were asked to leave the theater before the movie started in order to make room for someone else who bought a ticket you would be livid. The same is true for any other "ticketed" event. >"I have flown over 2 million miles in my lifetime and I have never seen someone forced to give up their seat." Here you can read all about it: https://www.cnn.com/2017/04/10/travel/passenger-removed-united-flight-trnd/index.html https://www.cnn.com/2017/04/10/travel/passenger-removed-unit... And that is not the first time either. Just because you haven't seen it doesn't mean it doesn't happen.
  - ryanwaggoner 9y ago
    If a significant fraction of people won’t show up AND a significant fraction of those who do show up will have flexible plans and be happy to take a later flight, “overbooking” seems a lot more reasonable.
    - 9y ago

nanis 9y ago

These days, it's not the legacy. It is mostly regulation pushed by Chuck Schumer[1]. Predictably, the policy has made it much more profitable to outright cancel flights at the first sign of trouble. Add to that the consolidation that occurred since then, we are left with: > Four carriers with over 80% of domestic capacity: > - Three large, hub-oriented, global legacy carriers (American, United, Delta) > - One large, point-to-point oriented ‘low cost’ carrier (Southwest) > Six much smaller carriers, each with less than 5% of the market > - Three smaller, primarily hub-oriented carriers (Alaska, jetBlue, Hawaiian) > - Three much smaller point-to-point travel merchandisers, heavily reliant on ancillary fees, so-called ‘ultra low cost carriers’ or ‘ULCCs’ (Spirit, Frontier, Allegiant) The main legacy are the huge health care and retirement obligations. Baumol (1982) discussed the airline industry as an example of a contestable market[3]. Free entry & exit no longer applies. [1]: https://www.nytimes.com/2009/12/22/business/22passengers.html https://www.nytimes.com/2009/12/22/business/22passengers.htm... [2]: https://www.eyefortravel.com/revenue-and-data-management/us-airline-consolidation-what-happens-next https://www.eyefortravel.com/revenue-and-data-management/us-... [3]: https://econpapers.repec.org/article/aeaaecrev/v_3a72_3ay_3a1982_3ai_3a1_3ap_3a1-15.htm https://econpapers.repec.org/article/aeaaecrev/v_3a72_3ay_3a...

toomuchtodo 9y ago
The US airlines industry is a public utility that attempts to operate (poorly) as private corporations.
- hueving 9y ago
  Not quite because adding new companies and routes is significantly easier than laying new utilities.
  - toomuchtodo 9y ago
    It barely ever turns a profit over the long term was my point.
bogomipz 9y ago
>"These days, it's not the legacy. It is mostly regulation pushed by Chuck Schume" The OPs comment was that the airlines were burdened by legacy from the 1950s. Mr Schumer's legislation is quite recent. Additionally the legislation "Passenger Bill of Rights" is quite reasonable - let your customers off the plane after 3 hours of delay. It's pretty easy to avoid that penalty. It's also worth pointing out that legislation was in response to unreasonable practices by the airlines in the first place. I'm not sure why it is even relevant here. >"The main legacy are the huge health care and retirement obligations" How is this relevant to discussion about the practice of intentionally overbooking?
- nanis 9y ago
  So-called "Passenger Bill of Rights" takes away options from passengers[1]. "We found that for every minute of tarmac time being saved there is, on average, a three-minute increase in the total passenger delay," said Vikrant Vaze, an assistant professor at Dartmouth's Thayer School of Engineering who co-authored the study. Adopted in 2010, the Transportation Department rule requires that passengers be allowed to deplane within three hours of boarding or landing for domestic flights. Airlines are subject to fines of up to $27,500 per passenger for violations. Hoping to avoid fines, airlines have been quicker to pull the plug on flights, Vaze said. That forces passengers to scramble to find another flight to reach their destination, something that has become increasingly difficult as industry consolidation reduces the number of available seats on planes. Flights that are not canceled have to start lining up anew after letting passengers deplane and then reboard, adding to the ultimate delay. "Most of these extra delays are being felt by those exact same passengers," Vaze said. "It's just that they're not on the tarmac." [1]: http://www.chicagotribune.com/business/ct-tarmac-delays-0105-biz-20160104-story.html http://www.chicagotribune.com/business/ct-tarmac-delays-0105...

hueving 9y ago

>You are simply enabling airlines to continue this unethical practice Don't project your morals onto the rest of us. As a frequent flyer who likes to travel I love this practice. It means lower prices overall and it gives me the opportunity to fly for free somewhere else later if I volunteer out. With the switch to real cash compensation on some airlines, I can even make money if I don't feel like using it to fly. I have flown over 2 million miles in my lifetime and I have never seen someone forced to give up their seat. The airlines always enticed people to volunteer out with (sometimes significant) compensation. United behaving like assholes with their forced removal is indicative of their behavior, not the practice of overbooking. I'm fine with increasing required payouts for forced removals to deal with piss poor airlines that don't conduct an auction until volunteers are found, but banning the practice outright is throwing the baby out with the bathwater due to ignorance of the practice.

bogomipz 9y ago
>"Don't project your morals onto the rest of us" I'm not projecting "my" morals onto anybody. Intentionally overbooking and knowing full well that you are going to bring inconvenience and stress to people is just plain fucked up. That's not really a grey area. If you bought a ticket to a movie and then were asked to leave the theater before the movie started in order to make room for someone else who bought a ticket you would be livid. The same is true for any other "ticketed" event. >"I have flown over 2 million miles in my lifetime and I have never seen someone forced to give up their seat." Here you can read all about it: https://www.cnn.com/2017/04/10/travel/passenger-removed-united-flight-trnd/index.html https://www.cnn.com/2017/04/10/travel/passenger-removed-unit... And that is not the first time either. Just because you haven't seen it doesn't mean it doesn't happen.
- ryanwaggoner 9y ago
  If a significant fraction of people won’t show up AND a significant fraction of those who do show up will have flexible plans and be happy to take a later flight, “overbooking” seems a lot more reasonable.
  - 9y ago