It is not the place of BTiQ Analysis to pass judgment on United Airline's tactics on how to make supply equal demand on their flights. It is our place to look at how it might affect business travel.
If you work in the private sector rather than for a government body or NGO, you know that the general objective is for your employer to make money. Airlines have struggled to make money for years until the downturn in the price of oil gave them a welcome holiday.
Overbooking is part of the business model and the ways in which airlines make money can be very relevant for corporate buyers.
For years a flexible ticket was a sine qua non of business travel. Companies were willing to pay extra to ensure their travellers would be able to get on whichever flight they needed to.
And for this privilege they were willing to pay a lot extra.
As travel managers have become more sophisticated buyers, they have also become more adept in analysing data. Study after study revealed that the majority of the time travellers actually used the flight they thought they would — in other words, for the number of times that a flexible ticket and a change in booking was needed, it was cheaper to rebook and pay the fees and costs over and above the fixed ticket than to purchase flexible tickets all the time.
In addition some departments and job functions tend to have a greater need for flexible tickets. Members of field sales and account management teams need to be able to meet with a customer when the need arises. Those travelling for a conference, training or internal meetings are less likely to need flexible tickets.
Flexible tickets are however considered necessary to any business travel offering — low cost carriers in fact introduce them, eg easyJet's Flexi fare, when they start targeting corporate business. They are at the root of the airlines' booking policy — a small number of leisure travellers will miss their flight because of human error or public transport delays but business travel is a big factor in the overbooking algorithm. There are more unpredictable passengers, ie those that either are getting on a flight they're not booked for or missing a flight on which they are booked, during times of heavy business travel, ie midweek early morning or late afternoon/early evening flights, or on business routes.
The higher yield from such tickets enables airlines to keep fares low at the back of the plane and is greater than the offloading compensation costs for a hotel stay and/or a guarantee of a seat on the next service plus a cash bonus or flight voucher.
But business travellers are unlikely to get offloaded.
As with revenue management the fine details of the offloading algorithms are considered commercially sensitive and therefore not published. However, it is safe to assume that factors such as cost of the ticket and whether the passenger is known — eg either identified as having been booked by a corporate client or a member of the frequent flyer programme —are considered.
Just as booking through a corporate programme can identify a traveller as someone entitled to be at the front of the rebooking queue, it can also put them at the bottom of the list for involuntary offloading.