5 ms·

Because if a seat is sold twice but only used one that's more profit than if every seat is only sold once. Most businesses maximise profits, not passenger exper

Because if a seat is sold twice but only used one that's more profit than if every seat is only sold once. Most businesses maximise profits, not passenger experience (and those that work on passenger experience do so because they've decided that's their way to increase profits and they'll do so in a cost effective way). Airlines say that this means all the seats on a flight can be a bit cheaper as the cost of operating the flight is shared amongst more people but I'm skeptical of that. Businesses like free money and only pass that on as lower prices due to competition when they really have to.

lisper 8y ago
> Because if a seat is sold twice but only used one that's more profit than if every seat is only sold once. Well, yeah, but that badly misses the point. Selling any product twice is more profitable than selling it only once, all else being equal. But in most industries, selling the same product twice is considered unacceptable. In fact, it would be considered fraud. The story that the airlines tell to make people think it should be acceptable in their industry is clearly bogus.
- tomhoward 8y ago
  One valid reason for this practice is the existence of fully flexible fares, that can be switched at late notice. So there is always some uncertainty about exactly how many ticket holders will be wanting to board a given flight. As for the rest, I dunno, maybe give them a break. Margins run at about 1%, give or take, so two empty seats matters. Heavy financial losses and bankruptcies are common for airlines. On the practical side, people like to get to their destinations at their preferred time, so it’s good that airlines try and serve people by getting as many people as possible onto their preferred flight. And for environmental reasons people like to know that capacity/fuel isn’t being wasted. Having worked with airlines for a long time, I’m no great lover of their business practices, but on this topic we can do a bit better than just presuming them to be greedy, exploitative monsters.
  - lisper 8y ago
    > One valid reason for this practice is the existence of fully flexible fares Airlines are under no obligation to offer fully flexible fares. If they screw up the business model so badly, maybe the answer is to simply stop offering them.
    - mschuster91 8y ago
      > If they screw up the business model so badly, maybe the answer is to simply stop offering them. The problem is that there is lots of competition backed by heavy state funding that can weather out bad events (e.g. a 9/11 scenario with a general downturn, or something as simple as a volcano eruption, or mundane such as strikes of any kind of personnel). The other smaller airlines have to keep up with the offering of the big giants even if they're unsustainable or risky or they risk directly going out of business.
    - tomhoward 8y ago
      Flexible fares matter a lot, both to customers (mostly business travellers with uncertain schedules) and airline economics. They don't screw up the business model, the business model relies on it. Without these fares, everyone would be paying more and flexible passengers would be inconvenienced. But the presence or absence of flexible fares doesn't change the fact that the precise number of passengers trying to board is uncertain, and that will always create a complex optimization problem if you care about both efficiency and customer satisfaction.
      - lisper 8y ago
        No, it's not complicated at all. Just sell "standby" tickets and "guaranteed seat" tickets. The problem is that right now every ticket is effectively a standby ticket, and this is buried in the fine print.
        tomhoward 8y ago
        I keep explaining to you, in good faith, based on 10+ years in this industry, why things aren't all they seem, and you keep inventing new reasons why it really should be that simple but that you seem to think nobody has thought of yet. A lot of people have thought a lot about these problems for a long time now. Many of them are both clever and well-intentioned. I understand that last sentence is where we differ. So I guess we're done here.
- rlpb 8y ago
  Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices. > In fact, it would be considered fraud. Fraud involves deception. This doesn't apply in a market environment where it is widely known that they oversell. The downside is that a free market isn't very good at adjusting to unlikely individual events. I favour the legislative model in which airlines are permitted to oversell but there is statutory compensation due to anyone who is bumped. This provides the counterbalance to airlines taking it too far in risk to passengers.
  - martin_a 8y ago
    > Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. No. You have to calculate for compensations for the people who have to be left behind because the flight was oversold. As you can read in the comments, those compensations can come in quite expensive. And rebooking passengers to other flights means that you can't sell that specific seat at the right price. > Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices. Again: No. You have 100 seats, you sell 100 tickets. People have to show up to fly with you, no refunds if you don't show up. If this type of calculation does not cover your costs as the airline, you have a bigger problem in general. > Fraud involves deception. This doesn't apply in a market environment where it is widely known that they oversell. I find it highly deceptive that somebody is trying to sell me a seat which he has already sold and is now hoping that one buyer does not show up. To be honest, selling the same good twice and only delivering once could very well be a definition of fraud. Try that on some kind of marketplace and you will find yourself in quite some trouble in no time.
    - rlpb 8y ago
      > You have to calculate for compensations for the people who have to be left behind because the flight was oversold. Sure, but factor those in and you still end up being able to offer cheaper ticket prices by overselling. It is clear that this is true from existing market behaviour. > You have 100 seats, you sell 100 tickets. People have to show up to fly with you, no refunds if you don't show up. That is one way of running an airline. However, given that some proportion of passengers change their plans in practice, overselling will cause a reduction of ticket prices in a competitive environment. This is just textbook economics and I'm not sure how I can explain this concept better to you. > If this type of calculation does not cover your costs as the airline, you have a bigger problem in general. The airline industry disagrees with you. > I find it highly deceptive that somebody is trying to sell me a seat which he has already sold and is now hoping that one buyer does not show up. You can find it to be whatever you want, but it is legal and not fraud. Wishing it to be fraud doesn't make it so. You could seek to make overselling illegal. If this were to happen then it would be illegal, but still not fraud.
- AlexTWithBeard 8y ago
  In most industries, selling the same product twice is considered unacceptable. Not necessarily. There are a lot of businesses which sell you a service assuming some "average" load. Web hostings, insurance companies for example. That's even before I start whinging about my monthly train ticket. But in pretty much any profession there's a chance of a promise not been met. If that happened I would expect an apology, and some kind of a remediation. For extra credit a small token of appreciation would also be nice.

lisper 8y ago

> Because if a seat is sold twice but only used one that's more profit than if every seat is only sold once. Well, yeah, but that badly misses the point. Selling any product twice is more profitable than selling it only once, all else being equal. But in most industries, selling the same product twice is considered unacceptable. In fact, it would be considered fraud. The story that the airlines tell to make people think it should be acceptable in their industry is clearly bogus.

tomhoward 8y ago
One valid reason for this practice is the existence of fully flexible fares, that can be switched at late notice. So there is always some uncertainty about exactly how many ticket holders will be wanting to board a given flight. As for the rest, I dunno, maybe give them a break. Margins run at about 1%, give or take, so two empty seats matters. Heavy financial losses and bankruptcies are common for airlines. On the practical side, people like to get to their destinations at their preferred time, so it’s good that airlines try and serve people by getting as many people as possible onto their preferred flight. And for environmental reasons people like to know that capacity/fuel isn’t being wasted. Having worked with airlines for a long time, I’m no great lover of their business practices, but on this topic we can do a bit better than just presuming them to be greedy, exploitative monsters.
- lisper 8y ago
  > One valid reason for this practice is the existence of fully flexible fares Airlines are under no obligation to offer fully flexible fares. If they screw up the business model so badly, maybe the answer is to simply stop offering them.
  - mschuster91 8y ago
    > If they screw up the business model so badly, maybe the answer is to simply stop offering them. The problem is that there is lots of competition backed by heavy state funding that can weather out bad events (e.g. a 9/11 scenario with a general downturn, or something as simple as a volcano eruption, or mundane such as strikes of any kind of personnel). The other smaller airlines have to keep up with the offering of the big giants even if they're unsustainable or risky or they risk directly going out of business.
  - tomhoward 8y ago
    Flexible fares matter a lot, both to customers (mostly business travellers with uncertain schedules) and airline economics. They don't screw up the business model, the business model relies on it. Without these fares, everyone would be paying more and flexible passengers would be inconvenienced. But the presence or absence of flexible fares doesn't change the fact that the precise number of passengers trying to board is uncertain, and that will always create a complex optimization problem if you care about both efficiency and customer satisfaction.
    - lisper 8y ago
      No, it's not complicated at all. Just sell "standby" tickets and "guaranteed seat" tickets. The problem is that right now every ticket is effectively a standby ticket, and this is buried in the fine print.
      - tomhoward 8y ago
        I keep explaining to you, in good faith, based on 10+ years in this industry, why things aren't all they seem, and you keep inventing new reasons why it really should be that simple but that you seem to think nobody has thought of yet. A lot of people have thought a lot about these problems for a long time now. Many of them are both clever and well-intentioned. I understand that last sentence is where we differ. So I guess we're done here.
rlpb 8y ago
Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices. > In fact, it would be considered fraud. Fraud involves deception. This doesn't apply in a market environment where it is widely known that they oversell. The downside is that a free market isn't very good at adjusting to unlikely individual events. I favour the legislative model in which airlines are permitted to oversell but there is statutory compensation due to anyone who is bumped. This provides the counterbalance to airlines taking it too far in risk to passengers.
- martin_a 8y ago
  > Allowing airlines to oversell has the effect, in a competitive market, of reducing ticket prices for everyone else. No. You have to calculate for compensations for the people who have to be left behind because the flight was oversold. As you can read in the comments, those compensations can come in quite expensive. And rebooking passengers to other flights means that you can't sell that specific seat at the right price. > Put another way: banning oversell would mean that airlines routinely travel with more empty seats. This inefficiency would show through in higher ticket prices. Again: No. You have 100 seats, you sell 100 tickets. People have to show up to fly with you, no refunds if you don't show up. If this type of calculation does not cover your costs as the airline, you have a bigger problem in general. > Fraud involves deception. This doesn't apply in a market environment where it is widely known that they oversell. I find it highly deceptive that somebody is trying to sell me a seat which he has already sold and is now hoping that one buyer does not show up. To be honest, selling the same good twice and only delivering once could very well be a definition of fraud. Try that on some kind of marketplace and you will find yourself in quite some trouble in no time.
  - rlpb 8y ago
    > You have to calculate for compensations for the people who have to be left behind because the flight was oversold. Sure, but factor those in and you still end up being able to offer cheaper ticket prices by overselling. It is clear that this is true from existing market behaviour. > You have 100 seats, you sell 100 tickets. People have to show up to fly with you, no refunds if you don't show up. That is one way of running an airline. However, given that some proportion of passengers change their plans in practice, overselling will cause a reduction of ticket prices in a competitive environment. This is just textbook economics and I'm not sure how I can explain this concept better to you. > If this type of calculation does not cover your costs as the airline, you have a bigger problem in general. The airline industry disagrees with you. > I find it highly deceptive that somebody is trying to sell me a seat which he has already sold and is now hoping that one buyer does not show up. You can find it to be whatever you want, but it is legal and not fraud. Wishing it to be fraud doesn't make it so. You could seek to make overselling illegal. If this were to happen then it would be illegal, but still not fraud.
AlexTWithBeard 8y ago
In most industries, selling the same product twice is considered unacceptable. Not necessarily. There are a lot of businesses which sell you a service assuming some "average" load. Web hostings, insurance companies for example. That's even before I start whinging about my monthly train ticket. But in pretty much any profession there's a chance of a promise not been met. If that happened I would expect an apology, and some kind of a remediation. For extra credit a small token of appreciation would also be nice.