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Contractual Issues of Flights Overbooking

 

STUDENT PAPER

By Rui Zheng

SKEMA Business School

Paris, France

 



ABSTRACT

Overbooking is a revenue management measure of airline companies while these years more and more issues show up along with airline companies using this to boost benefits. The author finds three problems which are: the airline contract terms vary among companies and there is no baseline, customer may not know clearly the company responsibility and customers’ rights, and the improvement should make towards overbooking terms. To answer these questions, the author used dominance method (Pair Wise Comparison and Additive weighting technique) to analyze, and find out that Air France contract provides the most comprehensive terms regarding overbooking and could become a baseline. Also, another finding is that customers don’t really know what is written in the contract because the contract is too long, hard to understand or hard to access. Based on all the findings that we gave some suggestions, this paper aims to help improve all airline companies contract regarding overbooking.

Key words: Overbooking, Contract, Terms and Conditions, Contract of carriage, Revenue management, Airline, Oversell

INTRODUCTION

On 9 April 2017, a man was dragged off from a United Airlines which was overbooking and failing to find volunteers willing to go down. Therefore, they choose to kick off the people randomly and forced him to leave. Later, the video disseminated all over internet. This made a huge impact to the brand reputation of United Airlines and ended with United Airlines paying a lot to fix the problem and avoid litigation. This brings overbooking issues back to people’s attention and lets people begin to think. Does an airline company have rights to do that? What are costumer rights when this happens? Further, what are written in the airline contract of carriage?

Overbooking is a revenue management measure of airlines companies, aiming at reducing or eliminate the negative economic impact of customer no shown up (cancel or change flights). It means that the actual number of seats exceeds the actual carrying capacity of the flight, so that it is very frequently for passengers who have purchased tickets but was denied boarding.  This oversell method solves the problem of the seat-emptiness in a flight because of customer not shown-up. While at the same time this cause a lot of delays of flights and complains of customer. Severely, as the worst case, company may loss customers forever as what happened to United Airlines.  Obviously, it has a critical signification for companies’ development and marking strategy.

  1. 1. Problem definition

As we can see, numerous problems arise in particular as regard to the problem overbooking. Some people even think flights overbooking as a kind of “contract fraud”. Is that true? This paper tries to figure out what is written in airline company’s contract, clarifies the specific terms and conditions regarding overbooking. By comparing the different statements about overbooking among the contracts of carriage of United Airlines, Air France and Air China which can represent their located region (USA, France, China) to compare and analyze their terms and conditions on overbooking. This paper will find out the best contract which is more favorable to customers and should become a baseline for other airline companies. In addition, based on the findings of the problems the author will give several suggestions in order to make airline contracts more comprehensive and practical.

More…

To read entire paper, click here

 

Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected].

How to cite this paper: Zheng, R. (2018). Contractual Issues of Flights Overbooking, PM World Journal, Volume VII, Issue VII – July.  Available online at https://pmworldjournal.net/wp-content/uploads/2018/07/pmwj72-Jul2018-Zheng-contractual-issues-of-flights-overbooking-student-paper.pdf



About the Author


Rui Zheng

Paris, France

 

 


Rui Zheng
is a master student in SKEMA Business School Paris, major in Project and Programme Management & Business Development (MSC). She graduated from South China University of Technology and holds double bachelor degrees on both Tourism & Hotel Management and Finance. After that she had one year master study of Project Management in CNAM Paris. She loves to embrace change. Passion is a word that defines the way she sees life and that drives her actions in every path of the journey. Now she is well equipped with the knowledge of project management and ready to become a real Project Manager in the future. She lives in Paris now and can be contacted at [email protected].