What to do about airline overbooking

Airline overbooking has been in the news after
United Airlines forcibly removed a paying passenger
from an ovebooked flight. Overbooking itself is
not a bad thing, but dragging a person off the
plane should not be allowed.

If an airline takes n reservations for a flight,
and p is the probability that a passenger with
a reservation actually shows up, then the
probability that k passengers will show up
is given by a formula called the binomial
distribution with parameters n and p.
If there are s seats on the plane, then add
up all of the probabilities from (s+1) to n
and you will have the probability that too
many people show up. Click on the link
below for an example of an Excel spreadsheet
to do this calculation:

http://myhome.spu.edu/ddowning/fos/airline_overbook.xlsx

This calculation assumes that the passengers
are independent of each other, which does not
apply if some people travel in groups, but it
is probably a reasonable approximation.
The value of p has to be estimated based on
past experience.

Overbooking allows airlines to use space more
efficiently, so it should still be allowed.
Hoewver, it clearly should be illegal for an
airline to involuntary kick someone off a flight
they have paid for. That practice is equivalent
to the fraud perpetrated by someone that sells
something that they don’t own, or by someone that
sells the same object to more than one buyer.

What airlines should do when too many people show
up for a flight is ask for volunteers who will
give up their seat in return for compensation.
If they don’t have enough volunteers than they have
to keep increasing the compensation that they offer.
If the compensation becomes large enough they should
eventually attract enough volunteers. This practice
will also make sure that someone who needs this particular
flight so they can make it to an extremely important
event will be assured they are at no risk of being
kicked off the flight. This practice is in fact the
way airlines usually do this, but it needs to be made
clear that this is the way they always have to do it —
no more involuntary bumping of paying passengers.

……………..

–Douglas Downing
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