Delta Overbookings Fuel First-Half Industry Increase

<B> Delta Overbookings Fuel First-Half Industry Increase</B>

By Megan Hjermstad

The latest report issued by the U.S. Department of Transportation discounted the industry perception that major airlines are bumping a large number of passengers. In the first six months of 1999, only 1.15 passengers of every 10,000 were involuntarily denied boarding, or 29,213 out of a total of 254.7 million travelers.

"I don't believe it is a problem," said Terry Trippler, airline expert at Onetravel.com in Brooklyn Center, Minn. "Anybody who's been taken off of a business-trip flight isn't going to agree, but given the overall statistics, the system does work."

Although the number of passenger bumpings is not as alarming as it may seem, it is higher than the same period last year. In the first half of 1998, only 0.98 passengers per 10,000 were denied boarding. Five individual carriers showed increases in bumpings in the first half of 1999 compared with the first half of 1998. Continental Airlines and US Airways, in particular, more than doubled the number of passengers denied boarding, despite only a small increase in the total number of overall passengers. "We can't have it both ways," Trippler said. "We can't say we don't want nonrefundable tickets and then expect the airlines not to oversell and protect themselves."

In the past, airlines only sold seats up to the plane's inventory, and had a waitlist for cancellations. With this system, however, airlines could not reconcile the problem of vacant seats as a result of no-shows. Now, airlines overbook their scheduled flights to a certain extent in order to compensate for no-shows and travelers who cancel and reschedule their flights at the last minute.

Under the current overbooking policy, airlines are forced to estimate how many passengers will not show up, and their success at minimizing the number of passengers denied boarding depends on their ability to predict travelers' patterns. "The problem with the airlines is that they research their competitors rather than their customers. As long as they continue to do that, they aren't going to have good predictive results," said Rolfe Shellenberger, senior consultant at Runz-heimer International.

According to the DOT report, Delta Air Lines continues to lead the industry with the highest rate of involuntary passenger bumpings for the first half of the year, with 2.68 bumpings per 10,000 passengers. In the second quarter alone, Delta reported 5,519 bumpings--nearly half the total of 11,908 for all 10 major airlines.

The airline with the next highest rate was Southwest, which in the second quarter reported 2,509 bumpings at a rate of 1.48 per 10,000 passengers. Shellenberger said Southwest's poor performance was the result of the popularity of the low-fare carrier. "It is a classic case in which growth has exceeded supply growth," he said.

Delta also ranked highest in the number of voluntary bumpings, reporting 45,221 in the second quarter. American posted second with 64,664 voluntary bumpings, but only 717 involuntary.

When a flight is oversold, DOT requires airlines to ask passengers to give up their seats voluntarily in exchange for compensation. But, Trippler said, "There is no consistency. One time they will offer you $1,000, and another time they will offer you a Tootsie Roll."

Carriers may negotiate with their passengers for a mutually acceptable amount of money, a free ticket or other reparations. Airlines give employees guidelines for bargaining with passengers, and they may select volunteers willing to give up their reservations for the lowest price. "The gate agents are given more leeway to take things into consideration on a case-by-case basis," Trippler said. "If they sat down and laid it out, it would be difficult."

The Customer First promises issued by the airlines in September include a pledge to "handle bumped passengers with fairness and consistency." According to Trippler, however, "they are really saying nothing more than what they are doing now. There is nothing to write home about on this one.