Overbooking Hits New Highs at Airlines

Airline flights are getting bumpier -- before they even leave the gate.

The number of people involuntarily bumped off flights bounced up more than 40 percent to 185,368 in the second quarter, compared with the same period in 2005, according to government data. It was the highest number in any second quarter since 2000, a particularly bad year for getting bumped, when business was booming and fares were high. Also, the number of passengers enticed to voluntarily give up seats on overbooked flights rose more than 10 percent in the second quarter over last year.

Under financial pressure from high oil prices, airlines have trimmed flight schedules this year and jammed more people onto remaining trips. That's led to more-crowded flights -- some of them overcrowded.

Regional airlines Comair, Mesa, SkyWest and Atlantic Southeast overbooked the most in the second quarter, according to the Department of Transportation. Among big carriers, Northwest Airlines had the highest rate of people with tickets who were denied boarding, voluntarily and involuntarily combined. Lowest: JetBlue Airways.

The increase raises several questions about the long-held airline practice of selling more tickets for a flight than there are seats on the plane. For one: The Transportation Department requires that airlines compensate passengers for bumping them off flights, but the maximum amount of $400 was set in 1978 and hasn't changed.

Had the maximum amount been adjusted for inflation, it would be more than $1,200 today. And some argue that since the last tickets sold are usually the most expensive, airlines have too much incentive to sell $1,000 tickets when no seats are available if the penalty is only $400 to bump a cheaper-fare passenger.

"I don't like the practice, but if it's going to be there, we have to have stricter penalties," says Al Anolik, a San Francisco attorney who specializes in travel law.

Even the practice of overbooking itself raises questions, since many other businesses aren't allowed to sell the same product to two different customers, or bait them with one deal then switch them to something else. Why are airlines different?

The answer dates back nearly 40 years to 1967, when the Civil Aeronautics Board, which regulated the airline industry at the time, decided to allow airlines to overbook to cover no-shows. The board figured that extra revenue allowed airlines to offer lower fares, and that overbooking benefited consumers who otherwise couldn't buy a ticket, only to have the flight leave with empty seats.

The rules got tested in court 30 years ago when Allegheny Airlines, now US Airways, bumped consumer crusader Ralph Nader from a flight and Mr. Nader sued. The U.S. Supreme Court ruled in 1976 that the federal government could allow bumping, but airlines had to offer compensation to volunteers first, essentially setting up an auction system. That's why you hear gate agents asking for volunteers to give up seats in exchange for free tickets or travel vouchers.

"It was a spectacular success," says Mr. Nader, who hasn't been bumped off a flight since.

Airlines say they have to overbook because some tickets are refundable and some customers don't show up. Curbing overbooking would likely weaken revenue, possibly push ticket prices higher and make it harder for business travelers to find seats for last-minute trips.

Airlines use reams of historical data and sophisticated modeling to predict, flight by flight, how many no-shows there likely will be. And their predictions are usually quite accurate. All told, in the second quarter, about 13 passengers among every 10,000 were denied a seat on a flight, and 91 percent gave up their seats voluntarily. "An airline seat is perishable," says David Castelveter, spokesman for the Air Transport Association industry trade group.