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Don’t be fooled by Overbooking practices


STUDENT PAPER

By Marguerite Grivet

SKEMA Business School

Paris, France

 



ABSTRACT

Around 42,000 aircrafts take off and land every day around the world and with 2,5 million daily passengers, airlines represent a huge market that appear really volatile since it’s deregulation in 1978.  This paper aims to identify the obligations that airlines still have. It will especially document the overbooking practice with the purpose of demonstrating how airlines policies may influence the passengers’ choices.  By using the Multi Attribute Decision Making method with a compensatory model we’ll be able to rank some airlines accordingly.  It should help people to understand their rights over airlines practices and show how some airlines can meet better expectations considering the overbooking.

Key words:  Overbooking, Contractual Rights, Obligations, Deregulation, Liquidated damages, Breach of Contract

INTRODUCTION

Would you buy a flight ticket if you were not 100% sure you will have a seat on the plane?

Probably not!  But that’s what actually people agree on when booking a flight.

If they happened to be unluckily denied boarding they would be facing one of the most used but legal commercial practices among airlines, which is the Overbooking.

Overbooking happens when airlines sell more tickets than the actual number of people they can accommodate.

With this practice airlines are responding to the problem of “no-shows” (people who reserved seat but didn’t board), they started facing in the 1940’s with the expansion of their service. By 1950 the practice had become widely spread as well as the complaints about it, leading to the Federal Aviation Act of regulation in 1958, which allowed the US Federal Government to “oversee and regulate the safety in the airline industry”. But later in 1978, the deregulation of the airline industry was enacted in order to make it enter a free market enabling a “great increase in the number of flights and a decrease in fares”.

If we now look at the first semester of 2017, considering 12 US airlines, the number of passengers that were removed involuntary from flights was 17,330. We may think it represents only 0.52 per 10 000 passengers but it still exists.

Booking a flight departing from City A to go to City B equals to planning a travel between two specific airports on a certain day and on a defined period of time. According to these characteristics, this is a project. In order to do that you purchase a flight ticket from an airline offering you a transportation service at a certain price. Accepting this offer passengers and airlines agree on a contract. Here we’ll talk about a contract of Carriage.

But sticking to the definition of a contract, overbooking appears as a breach of contract from the airline side if we consider it failed to perform your transportation.

That’s why I decided to focus my researches on the existing airlines booking policies and some published articles about Overbooking that question this practice. Through my paper I’ll compare the contractual rights from both sides, airlines and passengers, with the facts.

To summarize, this paper will analyze official documents and articles to answer the following questions:

How can passengers legally respond to this practice?

What are the airlines obligations over it?

Are there better options when choosing your airline?

More…

To read entire paper (with footnotes and references), 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, at [email protected]



About the Author


Marguerite Grivet

SKEMA Business School
Paris, France

 


Marguerite Grivet
is a MSc student at Skema Business School. In 2016, as part of her Master’s degree program, she studied one semester at the Faculty of commerce of Queen’s University, Kingston, Ontario, Canada. Back in France she worked for Dassault Systèmes in their Corporate Events Department. Currently following the specialization of Project and Programme Management and Business Development at Skema Paris Campus, she’ll graduate in 2018 after an exchange semester at La Catolica of Lisbon to study Economics and Management.  She can be contacted at [email protected]