Why Letting Customers Decide Won’t Work

Why Letting Customers Decide Won’t Work

Allowing customers to change at will, which is what would happen if airlines let customers decide if they are too sick to travel, would create an untenable situations for airlines. Overbooking would increase, as the likelihood for a confirmed passenger not showing up would increase. This activity would be hard to predict although forecasting would get better over time. Still, the industry would face more empty seats (the problem from not overbooking enough) and more situations of involuntary denied boardings (the problem from overbooking too much). In either case, the only tool the airlines would have to cover these increased costs would be higher fares, and that is exactly what more customer flexibility would create. Higher fares means less overall air traffic, as air traffic is highly price elastic. slot wallet