TRM 409.01 Overbooking Issue

8/6/2019 TRM 409.01 Overbooking Issue

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OVERBOOKING ISSUE INOVERBOOKING ISSUE IN

AIRLINE INDUSTRYAIRLINE INDUSTRY

GROUP MEMBERS:

NEE ROMANGNCE MALANYASEMN AKSOY

TRM 409.01 BUSINESS ETHICS

GROUP PRESENTATION


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ContentContenty

What is Overbooking?y Why do Airlines Overbook flights?y How it works?y Voluntary Bumping

vs. Involuntary bumpingy Compensationsy Complaintsy Cost-benefit

yJustice Theoryy Fairness Theoryy Rights Theory


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What isWhat is

Overbooking?Overbooking?


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Why Do Airlines Overbook Flights?Why Do Airlines Overbook Flights?

y To compensate for No-Shows

y Seat Utilization

y

More Profit


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How Airlines Make Overbooking?How Airlines Make Overbooking?

y Holiday season

y Statistical data of no-shows

y

Airline market current position


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Involuntary Bumping Vs. VoluntaryInvoluntary Bumping Vs. VoluntaryBumpingBumping

yWhat is Voluntary Bumping?

yWhat is Involuntary Bumping?


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Overbooking and Voluntary BumpingOverbooking and Voluntary Bumping

Before an airline involuntarily bumps passengers on anoverbooked flight, they will first ask for passengers who arewilling to voluntarily give up their seat. Passengersconsidering volunteering to give up their seat should beaware of two important considerations.

First, they will no longer be compensated under the deniedboarding or involuntary bumping rules that are in effect forthat flight.

Second, a passenger who voluntarily gives up their seat is in aposition to negotiate with the airline for other compensationthat could be more valuable to the passenger.


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Overbooking andOverbooking and

Voluntary BumpingVoluntary Bumping

I fly twice a month and ALWAYS fly United. Why do I

fly United? Because they are always so overbooked

that I know they'll be asking for volunteers to take

the next flight.

With a little patience you might never pay for

another flight again. I've been flying on a voucherand given another for being bumped. No

exaggeration, I've received $5000 in voucher in

2007. Remember, patience is a wondrous virtue.


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THY OverbookingTHY OverbookingPolicyPolicy

y First, the company asks for the passengers who are willing togive up their seat.

y Whether they find a volunteer or not, they will give

compensation for the passenger who can not fly.y They will arrange the flight within the shortest possible time.

y According to the waiting time, accommodation, food andbeverage and transportation facilities are free of charge.


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THYs CompensationTHYs CompensationAmountsAmounts


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Overbooking and InvoluntaryOverbooking and Involuntary

BumpingBumpingMost involuntarily bumped passengers are subject to thefollowing minimum compensation schedule:

y No compensation if alternative transportation gets the passenger

to the destination within one hour of the original scheduledarrival.

y One-way fare up to a maximum of $400 for substitute domesticflights that arrive between 1-2 hours after the original scheduledarrival time or for substitute international flights that arrive

between 1-4 hours after the original scheduled arrival time.

y If the substitute transportation is scheduled to get you to yourdestination more than 2 hours later (internationally), or if theairline does not make any substitute travel arrangements for you,the compensation doubles to a maximum of $800.


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exceptionsexceptions

Compensation schedule does not apply tocharter flights, to scheduled flightsoperated with planes that hold 30 or fewer

passengers or to international flightsinbound to the United States.

If a passenger can't be accommodated totheir satisfaction, they may be eligible to

request a refund for the remaining part ofthe trip, even if the trip were on annonrefundable ticket.


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Conditions for compensation;Conditions for compensation;

The passenger must have a confirmed reservation, Not to miss ticketing deadline,

Each airline has a check-in deadline, which is theamount of time before scheduled departure that the

passenger must present

himself to the airline

at the airport.If the

passenger misses the

deadline, he/she may

have lost his/her reservationand his/her right to

compensation if the flight

is oversold.


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ComplaintsComplaints

y If for some reason the

passenger believes that

the airline's response

to overbooking was notsatisfactory, he/she may

want to complain to;

y the Airline Company

y the Authorities.

If the passengers flight was on a U.S. airline or on aflight to or from the U.S., the passenger can also use;

y the AirSafe.com Online Complaint Form andAirSafe.com will forward his/her complaint

y to the U.S. Department of Transportation


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OneOne exampleexample ofof thethe complaincomplain formform whichwhich isis preparedprepared byby U.S.U.S.

AirSafe.com Online Complaint FormAirSafe.com Online Complaint Formy Please fill out the relevant information below and submit the form. Your complaint will be reviewed and either published in AirSafe.com's

complaint site FlightsGoneBad.com or forwarded to an appropriate organization such as the US Department ofTransportation. Prior topublication, your submission may be edited for clarity and to protect your personal information.

Please review AirSafe.com's privacy policy if you would like additional details of how your information will be used and your privacy

protected.

y Name:

y Street:

y City: State/Province: Zip/PostalCode: Country:

y Phone:

y Email:Complaint Information

y Airline Name: Flight Number: Location/Flight Leg: Date:

y Complaint Categories (Choose one or more)

Delays and other Flight Problems

Overbooking

Reservations/Fares/Boarding Cancellation Fares

Refund Baggage Safety Security

Frequent Flyer Program Customer Service Disability

Advertising Discrimination Animals Other (specifiy)

y Write Your Complaint BelowFor advice on what to say, please review the Complaints Tips Page

y

When you are done, please choose a button:


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CostCost--Benefit AnalysisBenefit Analysis

y All parties benefit,

and no party loses.

All passengers either

complete their flights orare recompensed by a sum which they value

more than the immediate completion of the

flight.y The airlines could also gain, because they

would be able to overbook to a higher degreethan at present and hence fly their planes

closer to seat capacity. (Falkson,1969)


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Benefits for Airlines;Benefits for Airlines;

The number of

empty seats on

sold-out flights reduced,

Capital asset

utilization increased(the total revenue earned for every

dollar of assets a company owns)

Involuntary

oversales reduced


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CCostsosts for Airlinefor Airline

y The costs that airlines have to pay topassengers who are bumped off of flights forwhich they

have already purchased

tickets affect

revenue substantially.

y Compensation

for overbookingaffects around

250,000 passengers

(0.1% of total).


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Kants CategoricalImperativeConcerned with individual rights of the person denied

something he was promised

Overbooking done as a normal practice to ensure higher dailyprofit would be difficult to justify

Breaking promises destroys the very basis of making a promise

in the first place


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Kant: Overbooking could beacceptable if . . .

At the time the reservation is made, the

traveller is told that a reservation does

not actually guarantee a flight, only a highlikelihood of a flight

(no promise has been made)


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JUSTICEJUSTICE

States that we should treat each

other fairly

y Rawls Veil of Ignorance

What would you decide is

acceptable if you were to be theweary traveler who discovers the

guaranteed ticket is not

guaranteed?


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DISTRIBUTIVEDISTRIBUTIVEJUSTICEJUSTICE

The CapitalistJustice

The passenger who pays more,exceptbeing volunteer, gets on the plane .To

express ,the passenger with higher

fares,gets more burden as monetary,so

he/she should get more benefits.So,the

case is justice in terms of capitalist view.


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COMPENSATORYCOMPENSATORY

ETHICSETHICS

Wronged traveller must

be compensated for the

loss and inconvenience.

FAIRNESS

In considering what is fair, you must

ask questions such as: what has the

hotel lost and what has the

passenger lost? What is thecompensation costing the company?

What is the denial of a ticket the

potential guest?


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VIRTUE ETHICSVIRTUE ETHICS

The airport is a human community.

Traits/virtues include: honesty, integrity,

tolerance, fairness, and cooperation.

Overbooking raises concerns about howwell an airline company fosters honesty,

integrity, and fairness if it does not keep its

word to its guests. Any enterprise that

engages in overbooking needs to be sure

that this practice is honest and open and it

does not promote an ethic of deception orirresponsibility


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RIGHTSRIGHTS

y

When a flight is oversold and there are not enoughvolunteers, some airlines bump passengers with thelowest fares first.

y Once a passenger have purchased her/his ticket, themost effective way to reduce the risk of being bumped

is to get to the airport early.

y If the passenger is bumped involuntarily he/she hasthe right to insist on a check if that is her/hispreference.

y The government's denied boarding regulation spellsout the airlines' minimum obligation to people theybump involuntarily.


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THANK YOUVERY

MUCH FOR YOUR

ATTENTION!

Documents

TRM 409.01 Overbooking Issue