The value of not flying
Why might people decline an offer of up to $10,000 just to keep their feet on the ground?
What would you be prepared to do to receive $10,000 in cash, on the spot? Before your thoughts go to things of questionable legality or morality, hold your horses — nothing like that is needed. No, these days, it seems, you can earn that kind of money for not taking a flight. And if this makes you raise your eyebrows, what do you think of the fact that such an amount is, apparently, still insufficient for most people to take the offer? Isn’t that odd?
Overbooking is not a problem that airlines have been experiencing over the past few years, but it seems to be on the rise again. So it turned out to be in the run up to the Fourth of July weekend in the US (when numerous people traditionally take the opportunity of Independence Day to go and visit relatives), especially as capacity, post-COVID, is still constrained. And just like in the olden days, airlines are accepting more bookings for flights than there are seats, under the (usually correct) assumption that at least some of the prospective travellers will not turn up, so they will still have a full plane. But they must guess how many no-shows there will be, and sometimes they overestimate that number.
The airline’s dilemma: getting out of trouble, or avoiding it in the first place?
When more people with a valid reservation turn up than they have room for on the plane, they are in trouble. They then resort to bribing travellers into giving up their entitlement to a seat until the books balance. It doesn’t happen that often, but once, returning home from Dusseldorf late on a Friday afternoon, I had the opportunity to observe the process in action. Like in a surreal auction, successively increasing amounts are proposed, until the required number of passengers agree to become ex-passengers. I cannot recall the exact amount the auction reached, but it was of the order of £500 ($600/€600). (And no, I did not take it.)
According to US Department of Transport rules airlines are entitled to “bump” passengers off a flight, mostly with a minimum compensation of $1550. (There are equivalent rules in the EU.) But airlines often offer a lot…