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- Glen Hauenstein, president of Delta, said the airline would look at increasing its overbooking rate.
- It's part of a new revenue management scheme designed to adapt to post-pandemic era travel.
- Overbooking is a common practice in the airline industry and comes with both risk and rewards.
Your next Delta Air Lines flight might come with a hard decision: taking the flight or a cash voucher instead.
That's because the airline is considering increasing the rate it overbooks flights Glen Hauenstein, president of Delta Air Lines, told investors in an April earnings call.
Overbooking is the practice of airlines selling more tickets than there actually are seats on a given plane for a given flight. Airlines usually use complicated algorithms that determine whether to oversell and by how much based on factors like time of day, passenger connections, what kind of traveler is usually on the flight, and more — all in order to maximize revenue on a flight.
Delta already does this, but it's looking to do it even more as it looks for ways to squeeze more revenue out of every flight as it becomes better able to predict what passengers will actually show up.
Airlines predict a certain number of passengers that purchased tickets will change their flights last minute, miss the flight, or just never show up. And they're often right, so a seat that would have been empty can go to a paying passenger instead.
Delta specifically has eliminated change fees for most fares, meaning customers can switch their flight to any other available flight paying only the difference in price, which could leave seats empty if not for overbooking.
Flights are only oversold if there is demand for it — so the new increased overbooking rate would be a way to "harness the demand set better," according to Hauenstein. In other words: flights in high demand can fly fuller even if passengers flake out, and Delta can keep the fare paid by both the passenger actually on the flight and the one who never made it. That's the best-case scenario.
Of course, overbooking comes with risks as well. The most obvious is: What if everybody shows up? In that case, airline employees ask for volunteers to take later flights, offering vouchers for flight credit, hotels, and other perks to passengers to get them to bite.
Hauenstein said the airline would take a measured approach, increasing overbooking little by little and seeing how it goes. "We don't want to overshoot and cause a disruption," he said.
Airlines must balance the risk and rewards of overbooking to maximize revenue on any given flight. Delta learned this lesson during the early days of the travel comeback during the pandemic when it offered $10,000 in compensation to passengers on an oversold flight from Grand Rapids, Michigan, to Minneapolis July 2022.
If nobody bites, the involuntary bumpings start, but Delta's historically generous compensation offers probably mean it won't come to that.
The US Department of Transportation lays out specific rules for oversold flights. Airlines must first ask for volunteers to give up seats before involuntarily bumping passengers. Legally, there is no limit to what airlines can offer volunteers as compensation, but the DOT lays out specific minimums and caps for involuntary bumping.
The new overbooking scheme likely means Delta feels more confident in its ability to predict post-pandemic passenger behavior now after a year or two of studying the trends of business and leisure travel.
"We now have the real post-pandemic travel patterns which are very different in terms of cities that people fly to and places they want to go," Hauenstein said, adding that the airline is now using those recent patterns in its analysis of not only when to overbook flights and by how much, but where to add more or bigger planes to carry more passengers.