Seat sales

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It’s the gate announcement every passenger hates to hear — the dreaded “carrot-or-stick” where airline staff ask for volunteers to come forward to leave an overbooked flight, adding that, if there are no volunteers, the airline will simply start picking the people who won’t get to fly.

Airlines like Air Canada (WestJet doesn’t) have made a business decision to overbook flights. They sell tickets to more passengers than their aircraft can hold, gambling that a certain number of passengers will either rebook or cancel before the flight. It’s a gamble that can — and does — go wrong, when more than enough passengers show up.

Air Canada then gives the bumped passengers either $100 in cash, or a voucher for $200 in travel — a dollar value that hasn’t changed in years and that is substantially lower than similar fees paid by other airlines around the world that also systemically overbook flights.

Now, that’s going to change. The Canadian Transportation Agency (CTA) has ruled on a complaint from Gabor Lukacs, a Halifax mathematician, who complained about the low rates the airline was offering as recompense for bumping passengers from flights. The CTA hasn’t set a new rate — it’s willing to hear arguments — but has said the current rates are too low.

It’s difficult to argue with that decision.

Why? Because if an airline is going to profit from gambling on passengers not showing up, it should have to pay if it loses that gamble.

If you, as a business, deliberately sell a product that you can’t actually supply — and that “sale” costs a customer either time or money — then you should have to make good on the costs, because you knowingly sold the product under false pretenses.

Air Canada has argued that the existing policy allows the airline to provide more flexibility in providing fully refundable tickets. But in the process, they’re ignoring a fundamental concept in the world of supply and demand.

When supply is scarce, demand drives up prices. Airlines already benefit from that side of the argument. All you have to do is to watch the way flexible seat prices rise as you get closer and closer to your date of departure and the number of available seats diminish.

Picture it this way, though: if you’re an overbooked passenger, supply and demand should work in the opposite direction. With your reservation, you now have something the airline wants — a seat they need to clear so they can satisfy other passengers they’ve also sold that seat to.

Supply and demand suggests they should have to pay premium prices for that scarce seat they need.

Why should they be allowed to set both sides of the equation?

Is it because you’re one person and they’re a large company?

It will be interesting to see what the CTA decides — and whether, once a fair price is set, Air Canada decides that the practice of overbooking is too rich for its blood.

Organizations: Air Canada, CTA

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Recent comments

  • mainlander
    May 31, 2013 - 09:02

    I got bumped from a U.S. carrier due to weather. I got re-booked for the next day. They put me up in a hotel & gave me food vouchers. I also got reimbursed $165 for toiletries & buying a new outfit when my luggage was 1 day late. When was the last time AC did that?

  • Petertwo
    May 31, 2013 - 06:04

    This practice is disrespectful, deliberately abusing the public and taking advantage of their "good nature" and tolerance. If they want to destroy the good qualities found in people they may not appreciate that ones that they may find replacing them. Maybe they should not be allowed to use the name Canada, this is not the way people internationally expect to be serviced, that is not providing the service they advertise. People are not cattle.

  • Bob
    May 31, 2013 - 01:13

    Air Canada International = Very Good Air Canada Domestic = Terrible

  • peteh
    May 30, 2013 - 17:33

    the media loves an Air Canada story and truth and fairness have little to do with it. All major airlines over book on flights with historically large no show factors. This replaces cancelled and no show bookings not all of which the airline gets paid for. This article makes it sound like they are the only ones doing it and its a fight on every fight. and the fact that WJ's official policy is no over booking does not make it true .

  • wayne
    May 30, 2013 - 15:00

    I have been flying for business for about 35 years, generally in eastern Canada ( Maritimes as far as Ottawa ) and sometimes to the UK. Years ago , if you lost your seat to overbooking, you would be given a free flight to anywhere Air canada few in North America, plus a seat on the next available flight, If you were not in your home city you would be putup in a hotel and meals paid. I have flown Air Canada, CP, West jet , Can Jet and all the others. People may complain about Air Canada...but if you fly A LOT you will come to realize that , as bad as they are, they are still better than the rest.

  • paul
    May 30, 2013 - 14:44

    And if you don't use the voucher within 1 year you can extend it...but that costs you $25 so essentially you get $175 for sitting in the airport for 8 extra hours. The big trouble with Air Canada is they have NO competition in alot of places and can do what they want.

  • Turry from town
    May 30, 2013 - 13:42

    Airlines such as AC overbook by about 10% because there is on averge for most flights a 10% no-show.People decide not to get up at that early hour so they turn over and go back to sleep.With the competition in that industry now, customer service is pushed aside in lew of cheaper airfares.One cancels the other. If you don't like that you can chose not to fly Aircanada and stop your belly-aching.

  • Craig Warren
    May 30, 2013 - 12:02

    You obviously are ok with sub standard service or do not fly often. Air Canada is one of the worst airlines around! They could care less and as Canadians we pay much more than any other carrier. Give your head a shake and stand up for change!

    • McLovin
      May 30, 2013 - 13:26

      I don't only fly throughout Canada my friend. Try flying with some International Carriers and you'll thank Air Canada for their quality of planes and their quality of service. These little overblown nuisance problems like overbooking is nothing compared to some of the problems that exist with some International Carriers.

  • Richard
    May 30, 2013 - 09:00

    From my experience, market forces re actually at play - You can always barter for a higher amount. The problem is that there's always someone in the lineup willing to take the $200 voucher.

  • McLovin
    May 30, 2013 - 07:17

    This practice allows Air Canada to get customers to pay, and probably pay more for seats on more attractive flights and then bump them to less attractive flights where the seats would otherwise go unsold. Air Canada is still in money, even after giving up the $100 in cash or the $200 travel voucher. I doubt it's illegal, but it's certainly unethical. In the meantime, Air Canada is still the best Airline I've ever flown.