Airline overbooking is unlawful, yet it remains an airline industry practice

Wedding, business trip, funeral or family vacation - no matter what the reason for travel - no one wants to be told that their flight, for which they have booked and paid well in advance, is full upon check-in.

On Wednesday, Shane called in to Cape Talk after being told she would not be able to board her kulula.com flight. Originally booked for departure to Lanseria International Airport, upon check-in she was told that the flight was overbooked, and that she would not be able to board as planned, due to deliberate overbooking on the part of the airline.

I've been trying to get on to an airplane, a kulula flight that I've paid for, I arrived on time for; and I've had nothing but admin. Apparently they over book their flights by ten percent, and sorry for you if you’re number 190 - when you get there, you’re not getting on the plane.

Kieno Kammies spoke to Chris Zweigenthal , CEO of the Airline Association of South Africa (AASA) as well as the spokesperson of the National Consumer Commission (NCC) Trevor Hattingh for clarity on the matter.

Hattingh explains that the Consumer Protection Act stipulates that service providers cannot sell something to a consumer that does not exist; which is effectively the case with airlines that overbook seats on flights. Airlines cannot sell more seats than they have, and accepting payment for something that does not exist is unlawful.

As a Commission we are aware of this practice of overbooking, and it is a serious concern to us.

Zweigenthal suggested that overbooking is something of an industry convention for most airlines. He says that it is to ensure that every seat is filled when a flight departs, particularly considering the highly competitive nature of the airline industry and the need to make profits.

The objectives for the airline is to fill the aircraft and maximize revenue… Airlines do use a very sophisticated revenue management systems to calculate the percentage of no-shows, for example. And obviously, they will overbook to that level.

Zweigenthal acknowledged that it does occur that passengers are unable to travel as a result of these revenue management models. He added that in such instances, airlines are required to compensate passengers for the inconvenience, although compensation is not necessarily standardised.

Listen to Chris Zweigenthal and Trevor Hattingh being interviewed about airline overbookings...

The CEO of Comair, the aviation company which owns the carrier kulula.com, says that they are currently earning a R55 profit on every seat booked on an aircraft. On the average kulula.com flight, with 189 seats, this calculates to the value of R10 395 for a single trip.

Listen to Erik Venter, CEO of Comair speaking on The Money Show with Bruce Whitfield:

Kieno Kammies also spoke to Iain Meaker, Executive Manager Commercial Distribution at Comair - responsible for customer retention, on the operations at kulula.com.

Meaker said that the airline uses intelligent software which looks at past consumer behavior and trends to determine what the potential for a no-show may look like on any given day and flight.

He said it is important that consumers understand the practice of overselling within the context of the losses incurred by the airline due to cancellations. Certain flight categories allow for airfares to be changed without penalties, compromising the profits of the airline.

To give insight, he explained that in the last four months (October 2014 to January 2015) the airline carried 660 000 passengers. Of those passengers, 23 000 cancelled their bookings, and in comparison 1070 were denied boarding. According to Meaker within the denied boarding category there are voluntary and involuntary denials, but in both instances compensation strategies are put in place.

Meaker advised that the practice was reserved only to certain flight categories and that is was specific to certain times; avoiding high demand times such as peak business or peak leisure periods.

Listen to Iain Meaker, unpack the business practices of overbooking flights at kulula.com below:

Have you been inconvenienced by being "bumped" off an overbooked plane? What was the compensation? And are some airlines more guilty of this practice than others?

Your comments below please...


This article first appeared on 702 : Airline overbooking is unlawful, yet it remains an airline industry practice


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