The Infuriating Math Behind Overbooking

[timosman]

http://www.popularmechanics.com/flig...d-overbooking/

By Eric Limer Dec 21, 2016



It's no secret that airlines overbook, nor is it a secret why: if you sell one seat to two different people, and only one of them shows up, you get extra money. Ideally they don't both show up, but occasionally they do. Fortunately the airlines take that into account with their math. Unfortunately that doesn't help you at all.

As this video from TED-Ed explains, the math behind overbooking takes a few factors into account. There's the number of seats on the plane, the (larger) number of tickets sold, the percentage of ticketholders that might show up, the likelihood of each one of those percentages, and the cost of hotels and other necessary costs if all the planning goes wrong and too many people do show up.

Even a simplified example is complicated, and the real life math is much more intense:



The most frustrating part? This math could be tuned to ensure the maximum number of tickets sold with a near zero percent chance too many people show up. Instead, the most profitable solutions often involve a decent chance a few passengers getting screwed, because the extra ticket sales outweigh having to put someone up in a hotel now and then. So just make sure you get to the airport early, and hope that someone else is running late.

[Zippyjuan]

"Personal Health and Well-Being"? At any rate- if you fly, make sure you have a seat booked. Otherwise you may not really be able to get on the plane.

[Anti Federalist]

"Personal Health and Well-Being"? At any rate- if you fly, make sure you have a seat booked. Otherwise you may not really be able to get on the plane.

Yup, this.

And also take advantage of online check in to check in as early as possible and obtain a valid boarding pass.

[Crashland]

Even with their formulas being configured to cause overbooking, you are still much more likely to have your flight cancelled due to bad weather or a mechanical problem, than to be bumped off the flight due to overbooking

[timosman]

Even with their formulas being configured to cause overbooking, you are still much more likely to have your flight cancelled due to bad weather or a mechanical problem, than to be bumped off the flight due to overbooking

Aren't they simply milking insurance money? Or are the insurance companies in on this scam?

[timosman]

This ridiculous practice of overbooking needs to stop. A simple law requiring the minimal compensation for bumping up a passenger to be $10,000 should take care of this. They turned air travel into a lottery.

[TheTexan]

This ridiculous practice of overbooking needs to stop. A simple law requiring the minimal compensation for bumping up a passenger to be $10,000 should take care of this. They turned air travel into a lottery.

Yes, clearly we need government regulations to solve this very serious problem that obviously is a very serious problem that clearly happens a lot

[MelissaWV]

Never been bumped. Haven't been on an overbooked flight in a dozen years, either.

[dannno]

This ridiculous practice of overbooking needs to stop. A simple law requiring the minimal compensation for bumping up a passenger to be $10,000 should take care of this. They turned air travel into a lottery.

Whenever you find yourself saying "we need a law..."

Seems like if there was more of a free market in air travel, some airliners might advertise that they don't overbook, or that they will compensate you X amount if they overbook would take care of it. If there is enough demand from the consumer, the service would be provided.

[Christian Liberty]

Whenever you find yourself saying "we need a law..."

Seems like if there was more of a free market in air travel, some airliners might advertise that they don't overbook, or that they will compensate you X amount if they overbook would take care of it. If there is enough demand from the consumer, the service would be provided.

Isn't this fraudulent though? And thus even under libertarian legal theory would be against the law? Mind, this is pretty comparable to fractional reserve banking

[MelissaWV]

Isn't this fraudulent though? And thus even under libertarian legal theory would be against the law? Mind, this is pretty comparable to fractional reserve banking

Have you read through your contract with the airline?

[Christian Liberty]

Have you read through your contract with the airline?

Ah so they bury it. There you go

[PaulConventionWV]

Isn't this fraudulent though? And thus even under libertarian legal theory would be against the law? Mind, this is pretty comparable to fractional reserve banking

Well, yes, but not every time something technically fits under the banner of "fraud" are we immediately justified in screaming bloody murder. Fraudulent practices occur at smaller levels all the time and nobody bats an eye. In this case, they're not actually intending to defraud you, but they figure that in the case that the known likelihood of you being defrauded does occur, you can and will be both swiftly informed and compensated without any need for legal trouble. If you really think it's worth it to invite the government into this transaction, then just be aware of what you are compromising in terms of freedom. I personally wouldn't make that trade, and that's why I don't think you should, either. Because your sensitivity to imperfections in the market affects my freedom.

[Christian Liberty]

Well, yes, but not every time something technically fits under the banner of "fraud" are we immediately justified in screaming bloody murder. Fraudulent practices occur at smaller levels all the time and nobody bats an eye. In this case, they're not actually intending to defraud you, but they figure that in the case that the known likelihood of you being defrauded does occur, you can and will be both swiftly informed and compensated without any need for legal trouble. If you really think it's worth it to invite the government into this transaction, then just be aware of what you are compromising in terms of freedom. I personally wouldn't make that trade, and that's why I don't think you should, either. Because your sensitivity to imperfections in the market affects my freedom.

Meh, I probably wouldn't, especially given the fact that our government is way worse anyways. But from an idealist perspective, it is a form of fraud/theft and probably deserves mandated 2-4 times restitution.

[PaulConventionWV]

Meh, I probably wouldn't, especially given the fact that our government is way worse anyways. But from an idealist perspective, it is a form of fraud/theft and probably deserves mandated 2-4 times restitution.

Who gets to decide how many times restitution it is?

[timosman]

For those who do not get it, the overbooking is driven by the efficiency for efficiency's sake. The same people who pack us densely on the planes complain about their commute being terrible without realizing this is because everybody is doing the same thing - packing people densely into smaller and smaller places. We were not supposed to live like human centipedes. The upside of this would be the airlines not having to make stupid excuses for the flights being full almost every time - "Dear passengers, our flight is almost full. Make sure you do not take an extra seat because that would cost us money." The crew would appreciate that too but they are too afraid to bring this up with the top brass in a way that will make them listen. This also shows how terrorized we all are as the encroachment of "efficiency" into our lives continues unabated without anybody able to make as much as a peep. Then we contemplate when will the last libertarian die since the high population density turns everybody liberal(for the greater good of course) Is there a possibility of having too much efficiency? The answer seems to be no. Then they bump you off the flight.

[heavenlyboy34]

This ridiculous practice of overbooking needs to stop. A simple law requiring the minimal compensation for bumping up a passenger to be $10,000 should take care of this. They turned air travel into a lottery.

Famous last word of many dead freedoms... "THERE OUGHTTA BE A LAW!!"

[Christian Liberty]

Who gets to decide how many times restitution it is?

I'm thinking in terms of Biblical law, where it varies a bit and judges would have to make the best decisions they can based on available case law. I believe Rothbardian libertarianism says its always 2 times no matter what (on this matter, either would be a significant improvement over the way theft is currently handled)

[MelissaWV]

I'm thinking in terms of Biblical law, where it varies a bit and judges would have to make the best decisions they can based on available case law. I believe Rothbardian libertarianism says its always 2 times no matter what (on this matter, either would be a significant improvement over the way theft is currently handled)

Two times what? Just the flight? Hotel? Meals? Inconvenience related to the delay? Lost wages? Cost of missed connection?

[PaulConventionWV]

I'm thinking in terms of Biblical law, where it varies a bit and judges would have to make the best decisions they can based on available case law. I believe Rothbardian libertarianism says its always 2 times no matter what (on this matter, either would be a significant improvement over the way theft is currently handled)

I see. So, not the parties actually involved in the deal, then...

[timosman]

I see. So, not the parties actually involved in the deal, then...

If you think you are doing a deal with the airline you should consult a doctor.

[Suzanimal]

Just tell them you know Danke.

[Christian Liberty]

Two times what? Just the flight? Hotel? Meals? Inconvenience related to the delay? Lost wages? Cost of missed connection?

I'm inclined to say all of the above as relevant.

[timosman]

Famous last word of many dead freedoms... "THERE OUGHTTA BE A LAW!!"

Your simplistic statement fails to apprehend the complexity of the situation. Are you trying to impress somebody? Why don't you spend more time thinking about this?

[dannno]

I'm inclined to say all of the above as relevant.

But that is only if it isn't already stipulated in the contract, which it is.

Not sure but you might be able to call up the airline and see if they can sell you a seat that is guaranteed, maybe they will let you pay a premium for a guaranteed seat.

Of course the flight may still be delayed for other reasons. The only issue I've had in the last 20 years is I missed a connection, and the next flight was booked and I had to wait like 4 or 5 hours.

Airline travel is never guaranteed to be on time.

[timosman]

Not sure but you might be able to call up the airline and see if they can sell you a seat that is guaranteed, maybe they will let you pay a premium for a guaranteed seat.

The seat pricing is whole another story which also should be addressed. If the airlines are so concerned about filling the planes up to the brim why don't they allow the tickets to be sold on the secondary market? It used to be possible to sell your ticket to another person but then the whole security thing came about and we were no longer allowed to resell tickets. The airlines did not complain much about this one. We really need Ebay for the airline tickets. If both the seller and the buyer are already preregistered with the airline or some clearing house what's the problem with transferring the ticket? The terrorists will win?

Airline travel is never guaranteed to be on time.

Now you are making $#@! up.

[dannno]

The seat pricing is whole another story which also should be addressed. If the airlines are so concerned about filling the planes up to the brim why don't they allow the tickets to be sold on the secondary market? It used to be possible to sell your ticket to another person but then the whole security thing came about and we were no longer allowed to resell tickets. The airlines did not complain much about this one. We really need Ebay for the airline tickets. If both the seller and the buyer are already preregistered with the airline or some clearing house what's the problem with transferring the ticket? The terrorists will win?

You answered your own question.. "Why don't airlines allow tickets to be sold on the secondary market?" Well, as you said, "the whole security thing came about". That sounds like a government program. It sounds like you want to remove a law, rather than write a new law, which is definitely a good thing.

Now you are making $#@! up.

Hah, I thought it was the most realistic thing anybody has said in the entire thread.

[dannno]

Where the hell is @Danke so we can /thread this?

[heavenlyboy34]

Your simplistic statement fails to apprehend the complexity of the situation. Are you trying to impress somebody? Why don't you spend more time thinking about this?

As does yours. Pretending to have an easy solution for complicated problems is utterly stupid and arrogant. Typical of the central planner's mindset.

[Christian Liberty]

But that is only if it isn't already stipulated in the contract, which it is.

Not sure but you might be able to call up the airline and see if they can sell you a seat that is guaranteed, maybe they will let you pay a premium for a guaranteed seat.

Of course the flight may still be delayed for other reasons. The only issue I've had in the last 20 years is I missed a connection, and the next flight was booked and I had to wait like 4 or 5 hours.

Airline travel is never guaranteed to be on time.

That's a way different issue though. Selling more seats than you actually have to sell is (at least on the face of it) fraudulent. Having uncontrollable delays is very different than selling seats you don't have available to sell.