JetBlue Almost Never Bumps Passengers—and That’s Bad for Business

Yet this process doesn’t play out at JetBlue Airways (JBLU), which has shunned “bumping” since its first flight 14 years ago. “Our traditional mission is to bring humanity back to air travel, and we feel that customers that purchase a seat should get a seat,” spokeswoman Tamara Young says, adding that not overbooking is part of the company’s culture. It’s seems like a kinder way to treat travelers, but it might not be a smart way to run an airline.

The ultimate goal is to fill every seat on every flight, preferably in the order of who paid the most. Travelers flying on the lowest fares are those who also tend to volunteer their seats for compensation, while customers who pay the most—usually business travelers—can’t be tempted out of their seats. Overbooking pays off, too: Airlines almost always make more from the extra fares than they give back to volunteers in future-travel vouchers. When an airline can’t find enough volunteers—the dreaded “involuntary denied boarding,” as regulators call it—the cost can run as high as $1,300 cash per passenger under revised rules adopted in 2011.

Yet because airlines have amassed years of detailed data on passenger no-shows—down to days, times, seasons, and specific routes—they only rarely need to write customers fat checks. The data also help them to know how to tweak their oversales for each flight, part of the complex algorithms that power revenue-management systems, the backbone of airlines’ fare pricing. As a result, bumping has decreased over the past decade, and is likely to dip further over time.

“Oversales are a way of increasing revenue where the benefits significantly outweigh the risks,” says Trey Urbahn, chief revenue officer of Azul, the fast-growing Brazilian airline. “Airlines have effectively managed involuntary denied boardings to zero.” Urbahn held the same title at JetBlue during a brief stint at the carrier.

Leave a Reply

Your email address will not be published. Required fields are marked *