WN CEO: Southwest to no longer overbook flights

flyguychi · Thu Apr 27, 2017 2:55 pm

In a talk with Jim Cramer on CNBC this morning, Gary Kelly the CEO of Southwest, said they have been working for years toward no overbookings and will not do so going forward.

https://finance.yahoo.com/news/southwes ... 57790.html

rajincajun01 · Thu Apr 27, 2017 3:06 pm

Though rare, oversold flights will still be a thing in situations of downgraded aircraft. Though Kelly's statement is progress, it won't illiminate oversold flights.

Brick · Thu Apr 27, 2017 3:06 pm

flyguychi wrote:
Gary Kelly the CEO of Southwest, said they have been working for years toward no overbookings and will not do so going forward.

Nice corporate speak. He is essentially saying "We're trying to try to not overbook". Either allow overbooking or do not. As Yoda said, "Do or do not. There is no try".

flyguychi · Thu Apr 27, 2017 3:14 pm

rajincajun01 wrote:
Though rare, oversold flights will still be a thing in situations of downgraded aircraft. Though Kelly's statement is progress, it won't illiminate oversold flights.

Of course a downgraded aircraft would still cause an oversell (which is different from overbooking) situation, however downgrading is fairly rare at Southwest (having only 2 different seat counts certainly helps with this). Hoping this new policy is put into place quickly as it will reduce "pain points" for customers AND employees as Gary Kelly put it.

737max8 · Thu Apr 27, 2017 3:24 pm

Yeah, Southwest VERY rarely swaps a -700 for a -800. It really shouldn't be a problem. The only thing that may be interesting is -7 MAX vs -700 (150 vs 143).

lightsaber · Thu Apr 27, 2017 3:29 pm

737max8 wrote:
Yeah, Southwest VERY rarely swaps a -700 for a -800. It really shouldn't be a problem. The only thing that may be interesting is -7 MAX vs -700 (150 vs 143).

Yea, that will be an issue. Since new aircraft have the lowest variable costs, but highest fixed costs, you do not want -7 MAX lying about.
Lightsaber

Rdh3e · Thu Apr 27, 2017 3:31 pm

Generally airlines keep a larger aircraft as the spare specifically for this reason. The spare for the -700 and the -7 at WN hubs would likely be a -800.

berari · Thu Apr 27, 2017 3:40 pm

Doesn't Westjet already do this? From what I recall they don't overbook.

Cubsrule · Thu Apr 27, 2017 4:07 pm

flyguychi wrote:
:goldmedal:
rajincajun01 wrote:
Though rare, oversold flights will still be a thing in situations of downgraded aircraft. Though Kelly's statement is progress, it won't illiminate oversold flights.

Of course a downgraded aircraft would still cause an oversell (which is different from overbooking) situation, however downgrading is fairly rare at Southwest (having only 2 different seat counts certainly helps with this). Hoping this new policy is put into place quickly as it will reduce "pain points" for customers AND employees as Gary Kelly put it.

No, but 73G to 733 subs do happen and can be a problem on short, contaminated runways. With ice or snow, the 733 can get something like 115 passengers out of MDW on a 500 mile flight. Of course, 733 retirements decrease magnitude of this problem. 738 runway performance issues are still around, especially at MDW, however.

ikramerica · Thu Apr 27, 2017 4:09 pm

Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

UALFAson · Thu Apr 27, 2017 4:13 pm

ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

THIS.

People, particularly leisure travelers on cheap tickets, just look at 1 UA incident like this an immediately declare overbooking bad without realizing that they benefit from the practice all the time.

ikramerica · Thu Apr 27, 2017 4:23 pm

UALFAson wrote:
ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

THIS.

People, particularly leisure travelers on cheap tickets, just look at 1 UA incident like this an immediately declare overbooking bad without realizing that they benefit from the practice all the time.

My brother is a big WN flyer and is constantly changing his tickets because he can. Without over booking on heavy routes, WN would be sending out empty seats on peak flights.

Are they going to count standby as "overbooking"?

flyingcat · Thu Apr 27, 2017 4:36 pm

ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

Something is not right, overbooking is a key financial contributor. Just eliminating it without other changes seems weird. How come I feel like the bags fly free is now KIA. The revenue it generated has to be made up somewhere. Remember Southwest is first and foremost a business.

jmc1975 · Thu Apr 27, 2017 5:05 pm

Perhaps they mean that they are not authorizing oversales until their new reservations system up and running as anticipated? That would make the most business sense.

asteriskceo · Thu Apr 27, 2017 5:26 pm

ikramerica wrote:
UALFAson wrote:
ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

THIS.

People, particularly leisure travelers on cheap tickets, just look at 1 UA incident like this an immediately declare overbooking bad without realizing that they benefit from the practice all the time.

My brother is a big WN flyer and is constantly changing his tickets because he can. Without over booking on heavy routes, WN would be sending out empty seats on peak flights.

Are they going to count standby as "overbooking"?

It's my understanding that the new reservation system automatically awards a seat, if there is one available, when changing flights. I'm assuming once seats are no longer in inventory that the passenger will then be placed on the standby list.

Cubsrule · Thu Apr 27, 2017 5:38 pm

ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

I don't know. WN's change policies are not all that liberal unless you buy full fare tickets, and at that point maybe an empty seat or two is not that bad. I think those of us who use the change policies frequently and liberally are a pretty small minority of the butts in the seats.

rta · Thu Apr 27, 2017 5:39 pm

ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

Yeah I don't really understand how this works. I'm sure there are many people (including myself at times) who cancel/rebook their tickets at short notice. I would think that WN needs overbooking more than anyone else, but maybe not.

flyguychi · Thu Apr 27, 2017 5:45 pm

On the investor call they stated that 80% of denied boarding are due to overbookings (the other 20% are operational: deadheading crew/aircraft downgauging/etc). They also said the no overbooking would/should be in place sometime this quarter, but no specific date. So theoretically denied boarding should be down 80% very soon and the revenue impact is already reflected in southwest's revenue projections.

KentB27 · Thu Apr 27, 2017 5:50 pm

They'll just put people on standby then. There's almost no such thing as a Southwest flight that's not completely sold out these days.

dmg626 · Thu Apr 27, 2017 6:08 pm

Rdh3e wrote:
Generally airlines keep a larger aircraft as the spare specifically for this reason. The spare for the -700 and the -7 at WN hubs would likely be a -800.

There aren't any 800 spares , occasionally a 300 here or there

Cory6188 · Thu Apr 27, 2017 6:45 pm

The UA incident aside, is overbooking honestly that negative of a practice for pax? When I'm not in a rush, I'm more than happy to take a voucher (or even better, an Amex gift card as DL has been doing at some stations recently) and wait a few hours for the next flight.

To me, VDBs are a win/win - the airline gets to maximize the LF, and pax are thrilled to get something out of the equation. IDBs are obviously another story, but aside from that, I'm not entirely sure that it's really a bad thing as long as it's well-managed by the airline to get volunteers.

Flighty · Thu Apr 27, 2017 7:23 pm

Overbooking is customer friendly. The operation needs to allow flexible options for customers.

You can eliminate nonconsensual denied boardings WITHOUT eliminating overbooking. It seems obvious to me that that's the way to go. The only obstacle I can think of may be WN's IT system cannot handle more sophisticated approaches to denied boarding.

airliner371 · Thu Apr 27, 2017 7:26 pm

Flighty wrote:
The only obstacle I can think of may be WN's IT system cannot handle more sophisticated approaches to denied boarding.

That changes next month with the new res system.

PITingres · Thu Apr 27, 2017 7:35 pm

Cory6188 wrote:
The UA incident aside, is overbooking honestly that negative of a practice for pax? When I'm not in a rush, I'm more than happy to take a voucher (or even better, an Amex gift card as DL has been doing at some stations recently) and wait a few hours for the next flight.

It depends on circumstances. More and more often, it's not a few hours wait, it's a day or even more.

I don't think that overbooking is necessarily bad per se, but when it goes wrong it can go very wrong. If I were running an airline, I'd be trying to revamp any pricing practices that encourage excessive speculative ticket buying. With load factors generally being up, I'm not at all convinced that the past is as good an indicator of the future as airlines have been relying on.

WPvsMW · Thu Apr 27, 2017 7:39 pm

Coming from the IT side, one of the hallmarks of current network revenue management is the interplay of LF and statistical overbooking. Current gen rev mgmt typically provides a 2% improvement in network revenue vs. previous gen deterministic OB (Belobaba et al., ch. 5, Wiley, 2016). Airlines are not going to revert to less sophisticated revenue mgmt, rather, they will tweak their OB algorithms.

Dominion301 · Thu Apr 27, 2017 7:41 pm

berari wrote:
Doesn't Westjet already do this? From what I recall they don't overbook.

You are correct. They have not been overbooking since day 1. The only time WS ever has to bump is if an aircraft sub results in a downgauge, but those are rare.

AaronPGH · Thu Apr 27, 2017 7:44 pm

I fly strictly United for FF purposes, and if they ever got rid of overbooking I'd be upset. My schedule is usually somewhat flexible and I love taking those offers.

pitbosflyer · Thu Apr 27, 2017 7:45 pm

Its crazy to think there was a time when if the NYC - BOS shuttle filled up, they would roll out another plane.

As much as overbooking is on everyone's minds right now...due to recent events. The most likely thing to happen is everything quiets down. And the US3 keep overbooking.

WPvsMW · Thu Apr 27, 2017 7:48 pm

The only way one would know that an airline does not overbook is to look at the rev mgmt engine code. Statistically, you could overbook, yet be 99.99% certain that there would not be an IDB.

Avoiding IDBs to move crew around are an entirely different matter that TMK no rev mgmt system expressly addresses, e.g., on this date six months from now we need to move X employees from Y to Z.

flyingclrs727 · Thu Apr 27, 2017 7:49 pm

737max8 wrote:
Yeah, Southwest VERY rarely swaps a -700 for a -800. It really shouldn't be a problem. The only thing that may be interesting is -7 MAX vs -700 (150 vs 143).

Lots of the 700's will probably be doing the intra-Texas and intra-California routes that the 200's, 500's, and 300's used to do.

jayunited · Thu Apr 27, 2017 8:01 pm

asteriskceo wrote:
It's my understanding that the new reservation system automatically awards a seat, if there is one available, when changing flights. I'm assuming once seats are no longer in inventory that the passenger will then be placed on the standby list.

Isn't this what the airlines are already doing? Don't they call this revenue standby.
I don't understand WN's policy to keep from overbooking a flight then there should be no revenue standby's once a flight is booked full revenue passengers should not even be able to book themselves as a revenue standby. One thing this policy almost guarantees is that WN employees flying as non-revs will not have to worry about getting on flights because their will always be no shows especially out of big and medium size cities. Take MDW you during the busy travel season you are guaranteed to have no shows saying your not going to overbook a flight is just ridiculous

michman · Thu Apr 27, 2017 8:14 pm

I would guess that the no-show rate on WN is lower than the legacy network carriers. Among other things, it's fairly difficult to save money by doing hidden city ticketing on WN. Whereas it's quite common to find on the legacy networks carriers. There's even a website dedicated to finding such deals (skiplagged.com).

berari · Thu Apr 27, 2017 8:58 pm

AaronPGH wrote:
I fly strictly United for FF purposes, and if they ever got rid of overbooking I'd be upset. My schedule is usually somewhat flexible and I love taking those offers.

Call and complain. Tell them that their program that inconveniences customers but is beneficial to you should be kept afloat, since you rake in the denied boarding compensation without ever putting in any effort. Also if you travel for Business, do mention to them that none of your trips actually cost you a dime. They'll seriously reconsider the situation for you and how it weighs against their PR conundrum.

32andBelow · Thu Apr 27, 2017 9:16 pm

Errors can also lead to passenger tickets getting cancelled in which case you either A.) move the passenger to a different flight on your mistake, or B.) Oversell the flight by 1 as chances are 1 person will not show up.

hivue · Thu Apr 27, 2017 9:37 pm

Somehow this UA IDB for non rev crew travel has morphed into the evils of overbooking. But AFAIK the fine print still says that the airline can IDB anybody. No more overbooking sounds like some more PR to me.

slcdeltarumd11 · Thu Apr 27, 2017 9:39 pm

Southwest does not really oversell anyway. Its very rare. Its United, Delta and AA that were really guilty of this.

737max8 · Thu Apr 27, 2017 9:51 pm

slcdeltarumd11 wrote:
Southwest does not really oversell anyway. Its very rare. Its United, Delta and AA that were really guilty of this.

Can you provide any facts for your ridiculous claim?

bob75013 · Thu Apr 27, 2017 11:38 pm

asteriskceo wrote:
ikramerica wrote:
UALFAson wrote:

It's my understanding that the new reservation system automatically awards a seat, if there is one available, when changing flights. I'm assuming once seats are no longer in inventory that the passenger will then be placed on the standby list.

You are correct. I flew DEN/DAL two days ago. Had a reservation on the 8 pm flight. Got put on the standby list for the 6:45 pm departure. Went to the gate to check when standbys would clear, and I got a boarding pass instaed. Apparently someone on the 6:45 changed or cancelled, and that person had space B2. That's what my boarding pass said.

aklrno · Fri Apr 28, 2017 6:22 am

rta wrote:
ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

Yeah I don't really understand how this works. I'm sure there are many people (including myself at times) who cancel/rebook their tickets at short notice. I would think that WN needs overbooking more than anyone else, but maybe not.

If you cancel and rebook another flight on short notice you end up paying the maximum fare for the new flight.

If you had been on a low cost fare, the new fare would probably be at least twice (or more) than the original flight. WN is well compensated for the possible loss of a low fare.

If you had been on a refundable fare in the first place, you are already paying 2 or 3 times the low cost fare. WN is well compensated.

If you buy several full price fares for different times and cancel all but one, WN loses. If you buy several low price tickets at different times and cancel all but one WN really loses, but you only get a credit, not a refund. Can the WN res system detect this situation and stop you from doing it?

The only case I know of where WN doesn't charge the full fare for short notice flight changes is if the original flight is delayed. There is some amount of delay which triggers the no-charge change, but I have talked them down to one hour a couple of times. When I tried that kind of a change on UA the gate agent just laughed.

intotheair · Fri Apr 28, 2017 6:38 am

aklrno wrote:
rta wrote:
ikramerica wrote:
Just means more pax will be standby. With WNs liberal change policies not "overbooking" would be financial suicide. Either change policies would be more restrictive going forward or more pax will be given standby status.

Yeah I don't really understand how this works. I'm sure there are many people (including myself at times) who cancel/rebook their tickets at short notice. I would think that WN needs overbooking more than anyone else, but maybe not.

If you cancel and rebook another flight on short notice you end up paying the maximum fare for the new flight.

If you had been on a low cost fare, the new fare would probably be at least twice (or more) than the original flight. WN is well compensated for the possible loss of a low fare.

If you had been on a refundable fare in the first place, you are already paying 2 or 3 times the low cost fare. WN is well compensated.

If you buy several full price fares for different times and cancel all but one, WN loses. If you buy several low price tickets at different times and cancel all but one WN really loses, but you only get a credit, not a refund. Can the WN res system detect this situation and stop you from doing it?

The only case I know of where WN doesn't charge the full fare for short notice flight changes is if the original flight is delayed. There is some amount of delay which triggers the no-charge change, but I have talked them down to one hour a couple of times. When I tried that kind of a change on UA the gate agent just laughed.

Yeah, this was also my understanding that WN doesn't really "do" standby or same day changes. You're basically just buying a walk up fare if you do a same day change.

obelau24 · Fri Apr 28, 2017 6:57 am

I remember working for WS and overselling a flight because a guest had an emergency and needed to get to YVR on the first available flight. I got a volunteer from the earlier flight to take the later flight in exchange for meal vouchers and WS dollars. They had to layover in YVR for 5 hours anyway so I just moved that layover time to my station and it worked out because their bags could then be tagged all the way and they got free meals and some airline credit. I don't know if this is possible with other airline systems. I know my current airline system doesn't allow for inventory manipulation. I would never have done this but in this particular situation I took a chance to help a grieving soul.

I've also had aircraft downgrades on WS - rare but they do happen. In the first season of YYC nonstops with the 737 we were weight restricted and I had to offload guests for weight and balance. I thrived on these kinds of IROPS. People would always say to me, "I thought WS doesn't oversell" and then I'd have to explain the whole operational situation.

smithcon · Fri Apr 28, 2017 7:30 am

In the past few months I have been flying pretty frequently, and I fly Southwest most often and can say for a fact that they have been overbooking. I have heard them call for volunteers on at least a half dozen of my flights in the past six months, although it has been a much smaller percentage of flights than United, which seems to overbook almost every flight I am on (admittedly my United flights are always spoke-to-hub-to-spoke flights through Chicago) . Southwest generally handles it pretty well (as they do most things customer-service wise) and I have never seen them have to go to an involuntary denied boarding situation, but I'm sure that happens sometimes. That said, Southwest, after Virgin America (RIP), is my favorite airline to fly among my frequent carriers; it's the most hassle free and consistently good experience, with rare (not not zero) exceptions. I'll be curious to see if the overbooking announcements actually go away in the future.

rbavfan · Fri Apr 28, 2017 8:42 am

jetBlue noted they have never done overselling of flights. They still get bumped passengers due to aircraft changes with smaller aircraft though.

Cubsrule · Fri Apr 28, 2017 11:55 am

intotheair wrote:
aklrno wrote:
rta wrote:

Yeah I don't really understand how this works. I'm sure there are many people (including myself at times) who cancel/rebook their tickets at short notice. I would think that WN needs overbooking more than anyone else, but maybe not.

If you cancel and rebook another flight on short notice you end up paying the maximum fare for the new flight.

If you had been on a low cost fare, the new fare would probably be at least twice (or more) than the original flight. WN is well compensated for the possible loss of a low fare.

If you had been on a refundable fare in the first place, you are already paying 2 or 3 times the low cost fare. WN is well compensated.

If you buy several full price fares for different times and cancel all but one, WN loses. If you buy several low price tickets at different times and cancel all but one WN really loses, but you only get a credit, not a refund. Can the WN res system detect this situation and stop you from doing it?

The only case I know of where WN doesn't charge the full fare for short notice flight changes is if the original flight is delayed. There is some amount of delay which triggers the no-charge change, but I have talked them down to one hour a couple of times. When I tried that kind of a change on UA the gate agent just laughed.

Yeah, this was also my understanding that WN doesn't really "do" standby or same day changes. You're basically just buying a walk up fare if you do a same day change.

IINM WN ignores any difference in PFCs on same day changes; I know I've never paid a difference. In that way it's not quite buying a new ticket, at least if you have an Anytime or Business Select ticket to start.

lightsaber · Fri Apr 28, 2017 2:17 pm

hivue wrote:
Somehow this UA IDB for non rev crew travel has morphed into the evils of overbooking. But AFAIK the fine print still says that the airline can IDB anybody. No more overbooking sounds like some more PR to me.

It has morphed. Passengers do not want to pay for old school service, but they expect to travel when they pay for a flight. IDB was just a parameter in the yeild equation. It turns out to be something passengers disliked. By keeping to out of date compensation, it created a conflict.

VDB is different. But what fraction of passengers understand overbooking? They hear the flight is oversold and that is the root cause.

This is years of bad PR boiling over. It isn't the one event, it is a customer revolt. Trust me, I stopped flying UA when $1,400 last minute fares didn't mean anything to a passenger without status. Customers are voting with their wallets. Unfortunately, partially due to the many new (last 20 years) of travel hassles added, they airlines are being blamed for issues out of their control. e.g., flights I used to take on United are now quicker to drive.

Cest la vie.

Lightsaber

frmrCapCadet · Fri Apr 28, 2017 3:17 pm

As others have said or implied, the difference with WN is that overbooking is treated as their problem, not yours.

bob75013 · Fri Apr 28, 2017 3:36 pm

aklrno wrote:
rta wrote:
ikramerica wrote:
J
If you cancel and rebook another flight on short notice you end up paying the maximum fare for the new flight.

If you had been on a low cost fare, the new fare would probably be at least twice (or more) than the original flight. WN is well compensated for the possible loss of a low fare.

HUH?

What airline wont charge you the new (higher) fare if you CANCEL AND REBOOK another flight on short notice? If you know of one, please let us know. At least WN does'nt charge you $200 for the privilege of using the ticket value of the cancelled flight.

IF you are A list and want to travel earlier in the day, why on earth would you want to cancel and rebook when you can simply travel standby and not pay one penny more? I did it on a DEN/DAL routing three days ago. I paid $39 for the 8 pm flight, and switched to the 6:45 flight ( priced at that time at $290), and there was no upcharge.

airliner371 · Fri Apr 28, 2017 7:57 pm

bob75013 wrote:
IF you are A list and want to travel earlier in the day, why on earth would you want to cancel and rebook when you can simply travel standby and not pay one penny more?

Exactly. This is a new perk for SWA elite members and a great one at that.

mcg · Fri Apr 28, 2017 8:38 pm

slcdeltarumd11 wrote:
Southwest does not really oversell anyway. Its very rare. Its United, Delta and AA that were really guilty of this.

At DEN recently many of the gate agents were making announcements looking for volunteers. Clearly WN does overbook.

mcg · Fri Apr 28, 2017 8:45 pm

Flighty wrote:
Overbooking is customer friendly. The operation needs to allow flexible options for customers.

You can eliminate nonconsensual denied boardings WITHOUT eliminating overbooking. It seems obvious to me that that's the way to go. The only obstacle I can think of may be WN's IT system cannot handle more sophisticated approaches to denied boarding.

This post is exactly right. One of the impacts of no overbooking will be an elimination of the cheapest fares on every flight. If UA on average overbooks 3 seats, then three bookings must be eliminated. Which three will it be?, logically the cheapest three. For the recored, I have no idea how many overbookings there are on average per flight, three is simply to illustrate. Elimination of overbooking also gets rid of the opportunity for some passengers to volunteer to take a later flight, in return for compensation. Some people like to volunteer.

The issue here isn't really about overbooking, it's about IDB's and airline procedures. Was the offending UA flight overbooked prior to the need to seat airline employees?

Who is online

Popular Searches On Airliners.net