Pay for Flying Later : Vouchers Keep Skies Friendly

It was 7 p.m. on a recent Sunday, and passengers were gathered at the gate, waiting to board the Provincetown-Boston Airlines 58-seat YS-11.

“We need nine volunteers to relinquish their seats on the flight to Newark,” said a voice over a loudspeaker. “We have too many passengers on Flight 761. Volunteers will get a voucher for a free round-trip flight to anywhere on the domestic routes of People Express, (owner of Provincetown-Boston).

“You will be able to visit such exciting places as Denver and San Francisco, and we guarantee to get you (to Newark) on the first available flight tomorrow morning.”

The passengers, mostly business men and women who had spent the weekend here and had to be at their desks Monday morning, listened, but no one budged. PBA Flight 761 was still overbooked.

The airline sweetened the pot:

Offer Gets Better

“We still need nine volunteers,” the voice pleaded. “We can’t go anywhere with more people than seats. We’ll guarantee to get you out on a flight to LaGuardia (Airport in New York) in half an hour, and you’ll still get the voucher.”

With that, gleeful passengers nearly fell over each other rushing to the ticket counter to accept the deal. After all, LaGuardia and Newark are both in the New York metropolitan area, and the offer was worth the modest amount of trouble it would take to get home from LaGuardia.

One passenger summed up the feelings of the nine who lined up quickly enough to volunteer. “I’ve hit the jackpot,” he shouted.

Such scenes take place frequently these days at the nation’s airports. By allowing people to volunteer to remove themselves from overbooked flights and offering free air travel as a reward, the airlines avoid the alternative: Government regulations require that passengers bumped involuntarily must be given cash payments, sometimes double the cost of the ticket. And they can still sue.

Cash payments go straight to the bottom line, and the financially ailing airlines do not need yet another drain on profits. By giving free flights to passengers who volunteer to get off overbooked flights, the airlines usually are disposing of inventory that often would not have been sold anyway.

System Saves Goodwill

Besides, the airlines do not like to bump people if they can avoid it. Ask someone to volunteer and give him something for nothing, and you have a satisfied customer. Throw him off the plane--even if you provide solace in the form of cash--and you’ve got an irate one.

The volunteer system has been allowed for about eight years. “It’s a difference of night and day in the handling of this problem,” said Hoyt Decker, chief of the Consumer Affairs Division of the Transportation Department, whose office monitors complaints against the airlines.

“The ability to reduce the trauma by seeking those least affected by it is a major step forward. Similarly, for the carriers to be able to use a non-monetary compensation increased their incentive to make the pot a little sweeter.”

Whatever the compensation to the passenger, overbooking is a fact of life in the airline business, and one that the airlines justify on grounds of economic necessity. They say they must overbook flights in order to protect themselves from the passenger who makes a reservation but does not show up for the flight--the so-called no-show.

Airline officials say that if it were not for the no-show problem, there would be no need to overbook flights. They point out that the airline industry is unique in that it does not, in most instances, penalize the no-show.

No-Show Losses Cited

If the airlines did not overbook, officials say, they would have to turn away many potential passengers. The reasoning: If a flight is fully reserved and if the airline has not accepted more reservations than the plane has seats, the no-shows would leave the plane going out with empty seats while people who wanted to fly were unable to do so.

“Overbooking is something that we would prefer not to do as a business practice,” Robert L. Moore, vice president of market planning for Western Airlines, said. “But, from a practical point of view, there is no other way that we can guarantee to maximize the revenue of the airplane.

“We would prefer to sell tickets in the manner that tickets are sold to concerts and athletic events: You sell the seat, you are assured that it is sold. If the person doesn’t show up, you still have the money.”

But it has never worked that way in the airline industry.

“If a person doesn’t show up for a ballgame, there is no competition for his business,” one airline official said. “If an airline antagonized a customer by charging a penalty, he might select another airline the next time around. But he goes back to the ball park.”

Penalty Fees Unpopular

Airline officials feel that competition in their industry is so great, charging a penalty would hurt their business. If all of the airlines did it, it would work out fine, they maintain, but one maverick who did not charge a penalty would make marketing difficult for all.

Al Becker, speaking for American Airlines, said that to levy a charge against those who do not show up for flights would make “a fundamental change in the way the airlines do business, and it would be difficult or impossible to do. How do you collect a penalty? We are not a law enforcement agency. Instituting penalties would make the airline system less convenient and less efficient.”

United Airlines said that it tried to collect $3 penalties from no-shows some years ago, before ticketing was computerized. Then people would say that they had called to cancel their reservations when in fact they had not, and United could not call them liars. “In the end it cost $5 to collect $3,” a spokesman said.

Some airlines are beginning to charge penalties, some as high as 50%, when people make reservations far in advance, for big discounts, and then cancel.

The no-show factor is significant, statistics show.

Empty-Seat Factors

Karen Walsh, yield management director with United Airlines, said that 15% of the people who make reservations on United flights do not show up. “If we didn’t space plan (overbook),” she said, “the best load factor we could have on any flight is 85%.” United says that overbooking saved it $96 million in the first five months of this year alone.

Other airlines say that their no-show experience is even worse than United’s, that it amounts to between 20% and 25% of their reservations. But on some occasions, such as holidays, and in some locations, such as heavily traveled commuter routes, the no-show factor runs much higher.

Continental Airlines said that more than half of those who make reservations on its flights between Houston and New York do not show up. According to Donald Burr, chairman of People Express, 65% to 70% of his airline’s booked passengers do not show up for their reservations.

American Airlines estimates that it had more that 5 million no-shows last year. To some degree, overbooking compensated for them, American spokesmen said, but even with overbooking, they added, the no-shows “spoiled”--left empty--223,757 seats valued at $27 million.

“Spoilage” occurs when a flight that had been sold out, and for which potential passengers had been turned away, actually departs with empty seats because of no-shows. American estimates that, had overbooking not been practiced, these losses would have totaled between $270 million and $400 million. In comparison, the $8.4 million that American paid out in 1985 to passengers who were denied boardings and to volunteers was a drop in the bucket.

“It is clear that . . . some system is needed to keep no-shows under control, and to soften their economic impact,” Becker, the spokesman for American, said.

The airlines contend that travelers benefit from overbooking. “Without overbooking, we would have a substantially greater number of empty seats on flights supposedly booked full,” said Boyd Lockard, director of central reservations control for Continental Airlines. “This would result in higher fares.”

To avoid having to deny passengers seats, the airlines study past no-show figures for every flight in order to forecast the no-show rate. Airline executives say that they generally overbook just a little bit less--about two percentage points--than the no-show factor on each flight.

According to Ron McNeill, director of capacity management for Trans World Airlines, the no-show factor on one daily flight between St. Louis and Los Angeles last month was between 32% and 36%, on most days closer to 32%. To compensate, TWA used an overbooking factor of 30%--which meant that if 30% of the reserved passengers did not show up, the plane would be almost full.

No-Show Rates Projected

The plane used on the flight is an L-1011 that carries 214 people in its economy section. TWA overbooked on that flight to 300 passengers, so if 30% were no-shows, 210 showed up. On days when 32% of the reservations were no-shows, 204 people would show up. When the no-show percentage rose to 36%, 192 economy passengers took the flight.

The airlines use sophisticated computerization to make their predictions. There’s even a company, Seabrook Marketing Inc. of Houston, that sets up computer programs to enable airlines to predict seat sales. Its customers include Republic, Southwest and Braniff airlines.

The airlines insist that their attempts at prognostication are helping them to curtail bumping.

In the last 12 months, McNeill said, TWA had only 12 denied boardings per 10,000 passengers, a level he called consistent with that of the industry as a whole. Of these, about 80% gave up their seats voluntarily. United says that less than a third of 1% of all prospective passengers are either bumped or volunteer to get off flights, and that 96% of those accept bonus tickets.

Many no-shows are travelers who are simply thoughtless. They make reservations and, if they cannot use them, never think of canceling.

Frequent Flyers Cited

When passengers deliberately do not show up for a flight, it is usually because they had made multiple bookings and decided to travel on another carrier, or because their travel plans changed, or because they were able to get on an earlier flight when they arrived at the airport. Business people who fly frequently are the worst offenders, the airlines say.

Airline officials concede that circumstances sometimes force a booked passenger to miss a flight. People do sometimes get stuck in traffic and meetings do sometimes last longer than expected.

Pan American World Airways’ no-show rate is high in certain parts of the world because of bad communications. “Our African flights experience 40% to 45% no-shows,” Scott A. McMahen, the company’s director-revenue control, said. “Communication is not exactly state of the art in Africa. People physically cannot call. We overbook accordingly.”

McMahen said that Pan Am must be careful with overbooking, however. This is especially true, he said, in places such as Africa, where few people ever volunteer to get off a flight, since the airline has only two flights a week between many African cities and the United States.

The solicitation of volunteers, which was permitted by the now-defunct Civil Aeronautics Board when the airlines were deregulated in 1978, is practiced in a number of different ways.

Requests for Volunteers

Usually, when it looks as if too many people are going to show up for a flight, an announcement is made or a sign is put up at the boarding gate asking for volunteers. Occasionally, passengers with confirmed reservations show up after a flight has been boarded. Then, if there are too many passengers, an airline official will go on board and seek out passengers willing to take later flights in exchange for a reward.

Gate agents are given a certain amount of discretion in what they can offer to get someone to give up a seat. They generally begin by offering flight vouchers. If no volunteers are forthcoming, they may make cash offers, which can be raised until passengers accept a deal.

“They are going to give you what they must give you to get you to get off that plane,” said Decker of the Transportation Department. “They might try to do it for nothing--a free meal--or they might have to go up to a free trip to Hawaii.”

In any case, the airlines, understandably, do not offer any more than government regulations require must be paid to involuntarily bumped passengers. If a carrier bumps a passenger but is able to get him or her to the destination within an hour of the original arrival time, no compensation is required.

If it takes the airline between one and two hours extra (or one to four hours on an international flight) to get a bumped passenger to the destination, it must give the passenger the face value of his ticket, up to a $200 maximum. If the passenger cannot be delivered to the destination within two additional hours (or four hours on international flights), he must be given 200% of the ticket price, up to $400.

Ticket Agents Like System

Small wonder that the airlines would rather have volunteers. But it’s not just the money.

“Ticket agents like the volunteer system,” said Con Hitchcock, legal director of the Aviation Consumer Action Project, a Ralph Nader consumer group. “They are on the front line, and now people aren’t threatening them with tennis rackets if they are bumped.”

The volunteer system was developed as a result of a lawsuit filed by Nader. Denied boarding on an Allegheny Airlines (now USAir) flight in 1972, he sued because he had to miss a fund-raising rally that he was to address in Hartford, Conn. (Although a jury awarded him $25,000, the judgment was later reduced to $10, the amount that an appellate court ruled was the extent of his actual damage.)

Even if bumped passengers accept remuneration, they may still sue the airline for breach of contract, so the airlines usually ask volunteers to sign releases as a protection against litigation.

Hitchcock said that he knows of no such suits being filed since Nader’s. “We advise people to take the money or the tickets” but not to sue, he says. “Litigation is difficult, time-consuming, and people have trouble proving the value of the time lost.”

Some Try to Get Bumped

Many people volunteer, and some even go out of their way to do so. Airline executives say that most customers are enthusiastic about receiving bonus tickets and are disappointed when airlines find space for them after they have volunteered.

Some people have made a game of trying to be bumped, or have become professional volunteers. They do this by finding out which are the most heavily booked planes--a 5 p.m. flight between Chicago and New York on a Friday night, for example--then hang around, hoping to earn a reward.

Rutha Bowen, manager of passenger services for Eastern Airlines, likens such people to Las Vegas gamblers hoping to hit the jackpot. “We have some very wise travelers,” she said. “Sometimes they know more about the planes that are crowded than do our own agents.”

One lawyer, who requested anonymity, does a lot of traveling for his employer, a Washington, D.C., company. Several times, he has arrived at the airport only to find his flight overbooked. He says he is always the first to put his hand up when volunteers are sought.

‘It’s a Great Deal’

Now, he conceded, he tries to book flights that he thinks are going to be full. His boss pays for his flight, and he uses the bonus for personal travel.

“It’s a great deal,” he said. “You lose a couple of hours, but look what you get in return. You have to be on your toes. The airlines usually seek only five or six volunteers.”

And then there’s the young soldier who volunteered recently to give up his seat on a flight out of Boston. He was delighted with the bonus voucher he received. Then, in what may have been a record performance of its type, he tried unsuccessfully to get on two more overbooked flights and received two more vouchers.

He got out on his fourth try.