Question

1. Most airlines deliberately double-book a certain number of seats on each flight, to minimize losses from empty seats when some passengers fail to turn up. This raises the problem of how to decide who gets left behind when all the passengers turn up. Over the years a variety of methods have been used, including the following:

i) First-come, first-served

ii) Discretion of the check-in clerk

iii) A free-for-all where passengers jostle each other for seats

iv) Airline buy-back where a cash payment, travel voucher or upgrade is made to those who take a later flight

1. Explain which groups are more likely to be left out using each method.

2. Which method does economic theory support?

Answer 1

a) i) In this instance the second person who comes is more likely to be left out as the first person will get the seat.

ii) Either of the groups have 50-50 chance of getting left out as it is as per the clerk who wants to let a person in. Familiarity with the clerk will enhance his chances of getting selected.

iii) The person who is the weakest and not quick to move will be left behind in this method.

iv) A person who is not in a hurry and is willing to wait will be left behind in this method wherein he is willing to take advantage of the upgrade.

b) Economic theory supports the method that getting a passenger who has paid almost nothing is better that keeping an empty seat in the plane which ultimately generates no revenue. Thus economic theory would support the fourth method wherein the late flight if its seats are going empty, will be utilised so that companies would be able to maximise utilisation.