Question

Airlines are willing to overbook flights because they know that people who make reservations do not always show up. Sometimes, however, this results in more people holding reservations at the gate than there are seats on the flight. Is overbooking efficient from the airlines’ standpoint? Is overbooking efficient from the standpoint of passengers? Feel free to include your personal experience or what you learned from the news about the airlines during the pandemic to your post.

Answer 1

As we know that, demand and price are inversely related with one another. When price of a good increase, people will demand less of the good other things remain the same.

In the airlines industry we often see that the demand for seats or reservation increases when their is a peak season or any special event in any country. For example when Olympic games are going to happen in any country more people will go to watch the Olympics from different countries. At that time the price for airline tickets doen not matter. Many people book their tickets in advance and many peoples are not getting the reservation as well. The airlines charges high prices during the peak seasons. I would like to mention an example of my own country. There is only one way which connects Jammu and Kashmir state to rest of india, during rainy and winter season this highway gets closed. The airlines charge large prices from the passengers, even for 250 kms travel the price touches 50 to 60 thousands of INR. The people are not getting seats sometimes on these high prices. The high prices will benefit the airlines.

Overbooking is efficient from the airlines point of view. They raise the price of tickets when they feel more and more customers are booking seats. On the other hand customers or passengers view overbooking as inefficient as it will lead to higher prices for tickets. More people will travel by air when the overbooking is low. The passengers will get the affordable tickets as well.

Hope you got the answer.

Kindly comment for further explanation.

Thanks ?