Bidding for Bumping

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What is it worth to you to get bumped from an overbooked flight? Delta thinks it has the best answer to that question: “Whatever it would take for you.” Starting soon, you’ll be able to state, in advance, what you’d ask for to get off the flight. Delta believes lots of you would take a deal for less than it usually pays. But if you really don’t want to get bumped, you can ask for enough that Delta will decide to pass.

As you probably know, most airlines overbook their flights to offset the no-shows who have reservations but don’t show up at the airport for the flight. Usually the airlines guess right about the number of no-shows and the amount of overbooking required to keep planes full. But when they guess wrong—when more travelers with reservations show up at the airport than the airplane has seats—somebody has to get bumped from the flight.

You probably also know that federal rules specify how much an airline owes you if it bumps you involuntarily—up to $800 currently, depending on circumstances, and likely to increase later this year. To avoid paying these cash penalties—and to minimize traveler aggravation—most airlines try to coax travelers to give up their seats voluntarily in exchange for some benefit. Usually, the offer starts with a voucher for a future flight, at somewhere around $200 value, plus a seat on the next flight. If the first offer doesn’t attract enough volunteers, the airline typically keeps raising its offer until it finds enough takers.

This system has actually worked rather well to minimize involuntary bumpings. According to government data, those voluntary bumpings exceed involuntary ones by about 10 to 1. But that last-minute bidding system can become quite chaotic at a busy gate in a busy airport. So Delta came up with a new scheme: If you’re on a Delta flight that Delta thinks might be oversold, the airline asks you, in advance, what you’d take to accept a voluntary bump. It can then process the “bids” quickly and efficiently and easily let everyone know who goes and who stays.

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In these days of mostly-bad ideas from airlines, this one seems like a win-win situation:

• If you want to minimize the chances for an involuntary bump, ask for way more than Delta is likely to give you—a first-class round-trip to Paris, for example, or 500,000 frequent flyer miles. That way, if you’re heading for a can’t-miss meeting or a cruise departure, you can be pretty sure of making your target. On the other hand, if the next flight is only a few hours later and you have plenty of time, a low bid is likely to get you a voucher.
• Delta believes it will win, too: It thinks enough of you will enter low bids that it will have to give up less than if it just started the bidding at an arbitrary figure. If the current starting figure is usually $200, and if lots of you decide to take $100, Delta comes out ahead of the game.
• In any case, both you and Delta win in that the boarding process goes more quickly and smoothly.

You can easily figure how you want to play the game. But if you want to get a bump reward, so far nobody knows the level at which bids are likely to succeed. I’m sure we’ll see reports fairly quickly after the system goes into effect.

There’s very little downside risk to you as a consumer. The main caution is to make sure that the airline’s offer includes a confirmed seat on the next available flight—or at least on an acceptable flight.

These days, other airlines are quick to adopt just about any bad idea a major player develops. For once, a good idea has surfaced. I hope that other airlines will copy this one.