Bumped Passengers Taking Off

Nearly 56,000 air travelers were involuntarily bumped from a flight last year, and another 621,000 were persuaded with cash or vouchers from overbooked airlines to give up their seats.

Those are the latest numbers from the Department of Transportation, which issues an annual report card each February on how well (or not) airlines are doing when it comes to everyone who buys a ticket getting a seat, arriving at their destinations on time and, last but not least, being reunited with their luggage.

Delays and lost bags are one thing -- an unavoidable fact of life, many air travelers might say. But what's the deal with bumping?

How is it that an industry routinely sells more of a product than it has in inventory, and government regulators apparently accept this as a reasonable business practice?

"Overbooking is not illegal, and most airlines overbook their scheduled flights to a certain extent in order to compensate for 'no-shows,' " the Department of Transportation acknowledges online.

But it turns out that travelers do have rights.

"They promise to take you from point A to point B, and then when you arrive at the airport they say they won't do it," said Thatcher Stone, a New York attorney specializing in aviation law. "That's breach of contract right there."

He should know. On Christmas Day in 2004, Stone was bumped from a Continental Airlines flight from New York to Telluride, Colo. He says the incident forced him to cancel a ski trip that included a $1,350 nonrefundable hotel deposit.

So Stone sued. And he won. More on that in a moment.

Poorly kept secret

First, a little background.

Airlines have been overbooking flights for decades. For many years, the practice was a poorly kept industry secret, typically accompanied by adamant declarations that a carrier would never, ever think of selling more seats than are actually available.

In reality, the airlines faced a significant problem with no-shows -- people who'd miss a flight or would make multiple reservations with multiple carriers. This would frequently result in half-full flights, which would cost the airlines money.

So the airlines quietly started overbooking their flights, gambling that the average number of extra tickets sold would be in line with the average number of no-shows. Often that would be the case. Increasingly, though, it's resulted in passengers being bumped.

The turning point, experts say, came in 1978, when the Civil Aeronautics Board issued guidelines for what airlines must do in the event of an overbooked domestic flight, including paying bumped passengers up to $400 for their troubles.

"The government didn't say it approved of overbooking," Stone said. "What it said was that if an airline does it, it must follow this regime."

The airlines, for their part, took the ruling as tacit governmental acceptance of what had become an established business practice, and no longer made a pretense of claiming they didn't overbook flights. From that point on, overbooking -- and bumped passengers -- became a standard part of air travel.

According to the latest numbers from the Department of Transportation:

-- The involuntary bumping rate last year was 1.01 in every 10,000 passengers (out of more than 550 million U.S. air travelers on 18 leading airlines). That's a 15 percent increase from the 0.88 rate in 2005.

-- Major airlines managed to stay on schedule only 75.4 percent of the time last year, compared with 77.4 percent in 2005.

-- There were 6.73 reports of mishandled baggage per 1,000 passengers last year, up from 6.64 in 2005.

At the same time, the Department of Transportation logged an almost 5 percent decline in the number of complaints received from travelers about airline service -- down to 8,321 last year from 8,741 in 2005.

"People are getting used to it," said David Stempler, president of the Air Travelers Association, a passenger advocacy group in Maryland. "We're complaining less because we understand that this is the kind of service you get when all you care about are low fares."

Be that as it may, it would appear that times have changed, at least as far as airlines' rationale for overbooking is concerned.

Decades ago, different market forces were at work. The supply of seats aboard aircraft was relatively plentiful, while demand for air travel was relatively limited. This made the danger of no-shows far greater for carriers.

Today, demand for air travel increases annually, while the supply of seats is declining amid industry consolidation and cutbacks in service by cash-strapped airlines. The risk of no-shows is far less than what it was before.

Voluntary bumping

So why do the airlines continue to get away with overbooking flights?

"The reason why these regulations haven't been updated is because airlines have done a pretty good job with voluntary bumpings," said Elliott Blanchard, a New York attorney who has examined overbooking. "That could change as the supply-and-demand situation worsens."

Officials at the Department of Transportation say their chief interest is in maintaining a balance that gives both travelers and airlines as much flexibility as possible when it comes to reservations and cancellations.

They acknowledge, though, that the number of involuntary bumpings is rising and that this may require regulatory action.

"We're taking another look at this," said Dayton Lehman, the department's deputy assistant general counsel for aviation enforcement and proceedings.

Lawmakers are also taking an interest. Rep. Mike Thompson, D-St. Helena, says he's as frustrated by the pitfalls of air travel as anyone and is looking at ways to create a "passenger bill of rights."

His proposed legislation is still lacking in specifics, but he says he's looking at everything from overbooked flights to lost luggage.

"I don't want to be punitive or push the airlines out of business," Thompson said. "But we're going to try to find some solutions that work."

In the meantime, there's Thatcher Stone's remedy.

After he got bumped in 2004 and was unable to enjoy his ski trip to Colorado, he looked closely at the Department of Transportation's rules for overbooked flights.

Right of refusal

In the fine print, it says that passengers are free to reject any compensation offered by airlines for being involuntarily bumped and can instead pursue a remedy in court. So that's what Stone did.

He filed suit in small-claims court and, in November 2005, Manhattan Civil Court Judge Diane Lebedeff ruled that Continental was guilty of breach of contract. She awarded Stone $1,360 for his hotel expenses, $1,000 for his delay and $750 for the temporary loss of use of the contents of his luggage.

"If you get bumped, don't take anything at the airport," Stone advised. "Go home, figure out your costs and then decide if you want to sue for breach of contract.

"Most people simply take what the airline offers them," he added. "They have no idea that they have rights."

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