I really liked this NPR article about his game theory and believe it could help improve the overbooking problem for future flights.
http://www.npr.org/2017/04/13/523726313/how-game-theory-relates-to-airline-booking
That’s one component of a solution…and IMO an easier one to deal with.
The much harder issue is rooting out what seems to be a deeply rooted institutional culture which condones or even encourages abysmal customer service and crappy planning on the part of management.
Yes, when I flew in the 1980s through the early 2000s, there seemed to be a friendlier culture in all the airlines and they really seemed to like working for the airlines and serving the customers.
These past few decades, it’s really more of a chore for everyone and trying to just get from point A to point B intact. As some articles have stated, it’s been mergers, bankruptcies and trying to make the airlines as profitable as possible and somewhere the idea of customer service seems to have gotten a very low priority. I don’t know how to get the culture to change. Sadly, I don’t feel a better (more passenger service-oriented) culture no matter which of the major carriers we fly.
The main reason people don’t give up their seat for $400 has nothing to do with group psychology. It’s for most people, $400 in cash is much more valuable than a $400 cash voucher, only good at 1 airline which expires within 1 year.
Yes, a cash voucher isn’t much good if you only have time for one vacation a year.
With respect to customer service one problem is the huge amount of power that airline employees have over customers post 9/11 in the name of safety. As they say, Power corrupts.
Another problem is that United and other airlines use the 80/20 rule focusing all service on top customers. If you fly First Class you’re more likely to have a good experience. If you don’t tough luck. This may help explain why Southwest is a better airline in terms of service for most.
As for game theory maybe. But the real problem here was pulling people off the flight which happened because United didn’t know until the last minute those employees needed to go. So in rare instances, I can think of some offers that might have people volunteering that cost the airline relatively little 1) first class upgrades on your next 2 flights, 2) 500 voucher plus 2 free suitcases with priority status for you luggage for the next year…
Or for the big guns… 3) immediate upgrade to platinum status ( that one could have people fighting over volunteering.)
the entire process of flying from the time you get to the airport to the time you land and leave on the other end is just like being treated like cattle.
the TSA security theater(naked body scans and no bottled water…hey it is for “safety” touching autistic childrens private parts for "security"you can never be to safe…sarcasm ), the multiple lines, delays, the waiting etc…getting crammed in a tiny seat and the attitude of most employees (even non airline employees as well as fellow passengers) is indeed a culture of negativity and disdain (and laziness) .
but what is the incentive to change? their is virtually no competition on most routes, you do not really have a choice of airports either…not like there is a one on every corner like a pizza restaurant. and even if you are flying LAX to JFK how many choices of airlines do you have? 3? so it comes down to availability and price.and the story this week is about united…next week will be delta or jet blue. and all the people who say they will never fly with united again. (hogwash) if they have the best flight or price they will fly united. nothing about air travel will change.
Interesting article. One thing I disagree with is starting with a high offer and then reducing it if more people respond than you need. The people who end up making the trade are going to be thinking that they should have/could have gotten the higher price and they’re going to be dissatisfied. Better than being dragged off, but still.
@roethlisburger yep, different economic principle: opportunity cost. $400 doesn’t even get me a round trip from my smaller airport which isn’t enought to compensate for my lost time.
And if I’m on the plane, I need more incentive both because I’ve accepted I’m traveling and more practically, I don’t believe you’ll get my luggage off this plane.
sportsman88, exactly it means tomorrow you will have to possibly wake up at 4am again, take the airport shuttle, go threw the entire airport hassle and nonsense all over again. not to mention most people have work or other obligations the next day or even same day as the flight and as you put it"I’ve accepted I’m traveling" so while even $400.00 is a lot of money it is not that much when you are already seated on the plane ready to go.
I think pricing strategy should be changed. When 95% of the plane is filled, the airlines already makes a big profit. Leave that 5% cushion for people who need urgent traveling (and don’t charge them hefty amount) or who miss connections. In the old time it was so easy to fly on waiting. Now it’s so difficult.
I’ve seen people jump at the chance for one of those vouchers. Maybe they were worth more than $400 but it’s pretty rare for an airline to resort to involuntary bumping IME.
Game theory is behind the algorithms airlines use in pricing tickets, these are based upon people’s behaviors depending on when they are booking and why (it is also used in a wide range of applications, the algo trading systems in the financial markets use game theory for example in determining their trade strategy). The real problem is in a sense because of these systems, they have it so tightly running that there is no real margin for error, for example a last minute need to take seats like this, because they literally have no empty seats for the most part.
The problem with game theory or any system is in creating policies to handle exceptions. For example, the airline industry years ago switched to a hub and spoke system, which is efficient, but the problem is it also means that a delayed flight in region A can cause backups all over the place (or for example, bad weather in NYC region screws up flights out of Chicago). Add to that the sheer number of flights they now have, and the odds of a major problem cropping up increased…and within the last 10 years situations started cropping up more and more frequently where passengers sat at the gate or were on the tarmac for long periods of time, whether it was a mechanical failure or simply delays in the flight path. 20 years ago if a plane broke down, the airline might have a standby plane available for use, with the hub and spoke system and the volume of flights it is likely they don’t. The airlines hadn’t developed protocols for this, so we heard the horror stories where the passengers were left on planes with overflowing toilets, no water, etc, and the only reason people now get compensated for that is they are required to under federal regulations. This is another example, given how tight flights are now with no wiggle room, it would seem obvious to have procedures for handling situations where you need to get people off of a plane when no one volunteers, but instead of having escalation procedures, they basically used force to get people off the plane which is stupid.
The last few times I’ve been on overbooked flights, I’ve been pretty surprised at how cheaply people are willing to give up their seats. In my head when I hear the call for volunteers, I’m thinking “When they hit $1000 I’ll start paying attention.” But they never seem to need to go beyond $200 - $400.
A non-hub-and-spoke network can also have problems if some flights are delayed by weather or whatever, since subsequent flights using those planes will be affected by the delayed planes.
What may be more of an issue in limiting flexibility to handle planes which are unavailable or delayed is the large number of different types of planes in the fleets of some major airlines, plus the use of multiple subcontracting regional airlines (SkyWest, ExpressJet, Republic, etc.). Sometimes, the same planes have different interiors with different numbers of seats in different classes. This means that planes and crews are not interchangeable as easily as on an airline with fewer types of planes.
Which airline’s fleet logistics make it easier to find a replacement for an unavailable or delayed plane?
https://www.united.com/web/en-US/content/travel/inflight/aircraft/default.aspx
https://www.swamedia.com/channels/Corporate-Fact-Sheet/pages/corporate-fact-sheet#fleet
It may depend on if the amount is in vouchers or cash / gift cards, and what the rebooked flight is. Some people may have circumstances which now make the later rebooked flight more desirable to them for whatever reason, so they will jump for the opportunity to rebook without paying the $200 change fee (the vouchers or money would be a bonus).
Yes, I am always first and foremost interested in what the next flight that will get me to my destination is–is it the same day? Can all of our party remain together? If either of these things are “No,” then we aren’t interested. Cash IS much more attractive than vouchers and they rarely ever offer trips to anywhere in the US anymore, just a travel certificate for $XXX. We haven’t been bumped voluntarily or involuntarily in years. H is very reluctant to EVER get bumped. My bachelor S is interested if the price is high enough and the next flight is soon.
Most of the airlines have gone through a period of bankruptcy, where they furloughed thousands, slashed their salaries and ditched their pensions, while increasing the workload (through additional volume of passengers and optimizing work rules). And then they rewarded top management with big bonuses for their cost savings, because they had to keep all that great talent (that put the airlines into bankruptcy). 
While airlines are making money (for now), and some are making what would be considered high salaries, I don’t know anyone who is back to parity and gotten back their pensions. Airlines are still negotiating tough and people remember the sting of what happened to them, it’s hard to forget. And they know that as soon as the economy tanks and the airlines start losing money again, it’s back to unemployment, salary cuts and work rules optimization. There is little security.
Take care of those issues, and you’ll have a friendlier culture. But I don’t see that happening.
ISIS uses child soldiers and suicide bombers. It makes zero sense to exempt minors from screening.
I expect airlines bank on a lot of those vouchers going unused in whole or in part.