Qatar AirwaysQATAR AIRWAYS l-ijtuill Revenue Management

SUPPLEMENTAL STATEMENT: RESPONSE TO ANPRM REGARDINGCHANGES TO DENIED BOARDING COMPENSATION (OST-2001-9325)

Qatar Airways, having previously responded to this ANPRM (document OST-2001-9325)wishes to provide a supplemental statement to address comments received by DOT. Manyrespondents to the ANPRM have made the claim that oversales/overbooking represents ananachronistic practice stemming from a time of regulated airfares. They claim that "no-shows"are no longer an issue for airlines thus precluding the need for oversale/overbooking andrecommend that DOT implement highly punitive compensation levels and/or prohibit thepractice. While Qatar Airways understands such a move would require an additional ANPRM,we believe it may be beneficial to DOT to understand the significant negative consequences ofsuch a policy shift.

The DOT should not prohibit airlines from overselling and/or overbooking flights, either on a dejure or de facto basis, because:

1) This would result in higher fares and decreased customer choice; and2) This would disproportionately penalise non-US airlines

An oversale occurs when an airline sells more tickets for a flight than the physical capacity ofthe aircraft and, of those passengers, the number that present at the airport for carriageexceeds the physical capacity of the aircraft. Oversale is closely related to the practice ofoverbooking, in which an airline accepts more reservations for seats on a flight than thephysical capacity of the aircraft.

A reservation is an indication by the passenger of their intention to utilise a seat. While areservation may create certain legal obligations between the passenger and the airline, theairline is not obligated to carry the passenger until a ticket has been issued. Passengers arefree to cancel reservations and the airline may also cancel reservations that are not ticketedaccording to their policies.

In the United States today, booking of the reservation and issuance of the ticket usually occurwithin 24 hours of each other. The practice in other parts of the world often variesconsiderably. Passengers may make a reservation, hold on to it for some time, and thencancel the reservation. This cycle may be repeated such that a passenger makes manyreservations before finally deciding to purchase a ticket. Because airlines expect this activity,they will accept more reservations than the physical capacity of the aircraft (i.e. the practice ofoverbooking).

In some of our markets, Qatar Airways may accept 50 reservations at various points in time forevery passenger we actually carry on a flight. On some flights at some points in time, we mayallow two to three times as many reservations as there are seats on the flight. We use

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SUPPLEMENTAL STATEMENT: RESPONSE TO ANPRM

sophisticated software to forecast the booking pattern for each flight and to determine howmany reservations to accept at any point in time. Anytime we overbook a flight we create thepossibility of an over sale situation - if too many passengers decide to purchase tickets wemay end up with more ticketed passengers than we can carry. In fact, we may do thisintentionally on flights where there is a regular and proven rate of passengers who fail to showup for the flight.

Contrary to claims in some comments received by DOT, the issue of no-show passengers andthe need to overbook to accommodate for those passengers is very real for many internationalcarriers. Lufthansa German Airlines, for instance, reported that 4.9 million of their passengersdid not show up for flights in 2005. Overbooking allowed the Lufthansa to carry 570,000additional passengers and generated EUR105million in additional revenue (after deducting fordenied boarding costs.)

Were airlines not allowed to overbook/oversell flights, we would face a significant loss ofrevenue and would be forced to raise fares to compensate. Additionally, our customers wouldface decreased seat availability. We overbook today with the expectation that somepassengers will change their minds and choose a different flight. Without overbooking,passengers may be forced to wait until another passenger cancels a reservation before theycould change their own reservation from one flight to another. Allowing overbooking but withreasonable compensation requirements therefore allows airlines to deliver lower fares andmore choice to our customers.

US Airlines, even when flying internationally, sell most of their seats in the United States. Asmentioned, the US market tends to allow less flexibility to passengers to hold reservationswithout ticketing and to change reservations once ticketed than many airlines based outsidethe use. Airlines based outside the US, such as Qatar Airways, tend to sell the majority of ourseats to passengers outside the US, even on our flights to/from the United States. This meansthat our passengers tend to have greater flexibility to make and change reservations than dothe passengers of US airlines. Therefore, non-US airlines tend to benefit more fromoverbooking than US airlines. Prohibiting the practice of overbooking would thereforenegatively impact foreign carriers disproportionately to US carriers.

Denied boarding of passengers results from the need by airlines to overbook flights to accountfor passengers who make reservations but do not buy tickets and those that buy tickets but donot fly. Foreign carriers have a greater need to do this than US carriers. Appropriatecompensation requirements encourage airlines to exercise this practice responsibly.Prohibiting the practice of overbooking would result in higher fares and decreased choice forpassengers and would unfairly advantage US airlines over foreign airlines. Qatar Airwaystherefore strongly opposes a prohibition or effective prohibition of the practice of overbooking.

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