Have you ever been bumped from a flight that was over capacity? It’s a drama that plays out at departure gates every day in airports around the world. Typically, gate agents on overbooked flights embark on last-minute negotiations with passengers who might be willing to take a later plane. The agents broadcast their offers– vouchers worth $200-$400–and keep ratcheting up the price until enough passengers accept. Customers involuntarily bumped get an $800 voucher ( which the Transportation Dept. is proposing to raise to $1,300).
With 541,000 US passengers bumped in the 1st 9 months of 2010 (53,000 involuntarily), there must be a better way to manage capacity (Supp.7) and manage revenue (Ch.13). According to today’s Wall Street Journal (Jan.14,2011), Delta Air Lines thinks it has the answer.
Delta’s high-tech new system (opened last month) asks passengers who check in online or at kiosks before going through security, what dollar amount they would accept to be bumped from their (overbooked) flight. Delta can then accept the lowest bids, eliminating a lot of uncertainty early. Not only does this give Delta a negotiating edge–passengers won’t know how low others are willing to go. But, in addition, “saving 3 or 4 minutes at the gate has a big operational impact”, according to Delta. Delta calls it a “win-win” for both consumers and the airline.
Is this good customer service–or do any one of us even expect customer service when we fly? The topic fits well when discussing capacity and yield management issues in both Supp.7 and Ch.13. Given that 8-10% of passengers with reservations do not show for their flights, what other suggestions do students have?
Discussion questions:
1. Which system is better–Delta’s or its competitors?
2. What options do airlines have for capacity and demand?
Of course Delta thinks this is good customer service. Like all airlines, they treat passengers like a commodity. I have nothing against Delta, they are as good(or as bad) as the other airlines, but adding even more stress to passengers’ check-in is crazy! At least in the past there were gate agents to explain the situation. Now, we will have to deal with another machine.
About ten years ago, I had a first-class ticket from Fort Lauderdale to Phoenix. The ticket agent said, “you better get some food to take on the plane with you. It is a long flight to Phoenix.” When I showed her that I had a first-class ticket, she told me there was no food in First either! When I expressed my dismay (my client had paid $2,500 for the ticket) she asked me to fill out a form so that I could send my complaint to corporate. “That is the only way we get things changed around here,” she said.
My reply was calm, but firm. I said, “I am not filling out your form. I don’t care what happens from now on, because I am never flying your airline again.”
I never did – and they don’t care.
I feel your pain, Prof. Quain. Maybe because I expect so little, I always plan to eat a full meal before any long flight and just assume there will be no food on board. I do believe that a very large percent of airline profits now comes from “extra” charges…food, checked baggage, ticket changes, etc.