Why All These Overbooking Changes are Bad for You
Maybe I am naïve, but I expect that most people reading this blog or the others on BoardingArea.com are more savvy than the normal traveler. That can be either r through your knowledge level to date and understanding that the “game” of frequent flyer miles is constantly changing and you need to stay ahead of it or you have seen or heard of the great benefits if you know the rules of the “game” and are seeking more in order to stay ahead of the average traveler.
Due to the unfortunately handled incident with Dr. Dao, things are going to get harder for you as the airlines adjust the rules of the game. United has announced and most other airlines, even Southwest, are following suit to your determent. Most airlines have announced that they will reduce overbooking of their flights, but use economics (i.e. a very high upper limit) to entice people to voluntarily give up their seat.
Someone who does not understand the frequent flyer game might be overjoyed to hear that they will raise the limits of Involuntary Denied Boarding to close to $10,000. Let me be the first one to throw cold water on that fantasy. As we have heard, the airlines are all going to cut back on overbooking, even though the Dr. Dao incident had nothing to do with overbooking. That occurred because of crew priority which is a whole ‘nother thing and United promised to cut back on that. However, the media grabbed hold of the term overbooking and now that is being cut back. Overbooking was a great thing if you were savvy to the rules of this game and provided a great “bumpertunnity” to borrow a phrase from my fried Rene. That is, it gave people who were savvy to this world of frequent flyer rules a great way to grab hundreds of dollars in value for very little sacrifice. Overbooking opportunities were rare, only 0.62 out of 10,000 passengers were involuntarily bumped last year and now it will presumably be less than that.
Smart people knew to immediately sign up for an opportunity to bump due to overbooking, but then start negotiating for the compensation, which was not limited to a dollar value off of a future flight. You get privately with the Gate Agent and you could ask for a hotel, food vouchers, First Class on the follow-on flight, etc. in addition to hundreds of dollars off a future flight. Really astute players of the game could take a bump due to overbooking, wait for that flight, and then volunteer AGAIN for another opportunity to bump and collect even more. I even knew guys who would purposely book on days like the day before Thanksgiving in order to collect all these Voluntary Denied Boarding (VDB) bumps and pay for a lot of their travel throughout the rest of the year. 434,425 people took VDBs last year, some more than once I am sure.
I am afraid that a lot of those stories, like many in the frequent flyer world, will now be a thing of the past. If the airlines cut back on overbooking, that means less VDB opportunities. It means really, really less IDBs will take place. For those of you that were salivating at the $10,000 numbers that the media touted, those only apply to IDB , meaning they didn’t get enough VDB takers, and those will be almost unheard of if overbooking is reduced.
For you to get a $10,000 offer, everyone else on the plane would have to deny all previous offers. Now that is not impossible, but it is a little bit like thinking that you can win an auction for $1. Sure, if no one else bids, it is yours for a dollar, but what are the chances of that happening? In the Dr. Dao case, United procedures made them stop at offering more than $800. In other words, their internal policies of saving a few dollars got in the way of them offering a price that the market (the passengers) would bear. If they kept raining their price to $1000, $1200, etc. eventually someone would have decided it was worth their time to give up their seat. Great, so for you to collect the $10,000 limit now set by the airline, everyone else on the plane must refuse offers of $5,000, $6,000, etc. What do you really think the chance of that happening is? This is essentially an auction and you have to pull the trigger before others do.
To conclude, don’t get your hopes up of a big payout with this new policy. You have to decide your personal pain point where you would accept an offer, but don’t hold out forever as you are in competition with everyone else on that plane. Take the $400 or $800 offer and then negotiate for an upgrade on you next flight, better routing, etc. Waiting until the super-lucrative offer is given means that someone else is very likely to take it instead of you. The laws of economics are alive and well.
