Overbooking Is An ‘Industry Practice’ For Airlines. But How Does It Work?

The practice of “overbooking” airline seats became a hot topic once again after It’s Showtime host Vice Ganda called out flag carrier Philippine Airlines (PAL) for an overbooked flight from Bangkok to Manila last Tuesday, Oct. 24. 

Although PAL said in its apology to the host-comedian that the flight was not overbooked, Vice maintained that it was reason given to her by the airline staff when she was told that there was no seat available for her.

Vice Ganda Calls Out PAL Over Delayed, ‘Overbooked’ Flight; Airline Cites ‘Unserviceable’ Seats

Following the incident, many Filipino netizens have again called out airlines for the practice of overbooking seats.

PAL, in the conditions of contract published on its website, informs passengers of the possibility that flights may be overbooked and that “there is a slight chance that a seat will not be available on a flight for which a person has a confirmed reservation.” 

“If the flight is overbooked, no one will be denied a seat until airline personnel first ask for volunteers willing to give up their reservation in exchange for compensation of the airline's choosing,” read the contract.

“If there are not enough volunteers, the airline will deny boarding to other persons in accordance with its particular boarding priority. With few exceptions… persons denied boarding involuntarily are entitled to compensation,” it added.

Industry practice

The airline described overbooking as an “industry practice” to “serve as buffer for confirmed passengers who do not show up for their flights.”

In defense of the practice, the International Air Transport Association (IATA) in 2017 said the practice creates “more choice and cheaper fares for consumers” and “allows carriers to manage revenue.”

It noted the “uniqueness” of airline business, “in that once a flight takes off, the seats on that flight are no longer available for sale; it’s a time-sensitive, perishable product.”

Should overbooking be prohibited, airfare would be expensive as customers would have to shoulder the costs of empty seats, IATA said.

Overbooking is indeed allowed under the country’s Air Passenger Bill of Rights (APBR), issued in 2012 by the then Department of Transportation and Communications and the Department of Trade and Industry.

It defined overbooking as “the practice by air carriers of selling confirmed reserved space beyond the actual seat capacity of the aircraft.”

“While it is an accepted practice for an air carrier to overbook its flights, any expense, consequence, or inconvenience caused to affected passengers must be borne by the air carrier,” read the policy.

It outlined the process that airlines must follow in case of overbooked flights.

First, it shall “determine the number of passengers in excess of the actual seat capacity of the aircraft,” to be followed by an announcement and a call for volunteers who are willing to give up their seats in exchange for air carrier compensation.

Interested volunteers shall be provided with a list of amenities and offers that they can choose from, including the “option to be given priority booking in the next flight with available space or to be endorsed to another air carrier upon payment of any fare difference.”

Other possible options include accommodation or a cash incentive.

“In case the number of volunteers is not enough to resolve the overbooking, the air carrier shall increase the compensation package by certain degrees or by adding more amenities/services until the required number of volunteers is met,” it added.

Airlines that violate the said provisions of APBR face a maximum fine of P5,000, in line with the penalty set under Republic Act 776 or the Civil Aeronautics Act of the Philippines, which was passed in 1952.

Other airlines

Like PAL, AirAsia’s terms and conditions for Z2 flights also has a provision regarding overbooking.

“In line with industry practice, there may be a possibility that a seat may not be available to a passenger on the flight even if the booking is confirmed such as in case of flight overbooking,” it said.

In such case, AirAsia said it shall at its option or line with applicable laws or regulations provide either of the following: involuntary flight change without additional charges, credit account or refund.

Meanwhile, Cebu Pacific’s customer service plan has no specific provision regarding overbooking. But the policy contains options that will provided to passengers in case of flight changes.

Cebu Pacific drew criticisms earlier this year after reports of flight cancellations and offloading supposedly due to overbooking.

Sen. Nancy Binay, chair of the Senate committee on tourism, filed a resolution seeking an investigation on the matter.

In its statement, Cebu Pacific cited fleet availability issues and not overbooking as the reason for the cancellations.

It was confirmed by Civil Aeronautics Board (CAB) executive director Carmelo Arcilla, who said in June that the shortage in aircraft equipment and parts is the root cause of the flight disruptions.

CAB: Airlines Reducing Flights To Address Woes

During the Senate hearing, he acknowledged that overbooking is a way for airlines “to be able to fill the plane.”

“(But) it has a distinct disadvantage in a sense that if it is abused, then it will cause inconvenience and suffering for the people who are offloaded,” he said. 

The APBR does not set a limit on overbooking, Arcilla said, unlike the pre-2012 CAB regulation that limited it to 10 percent of the airline capacity.

The CAB official said the requirement for airlines to compensate affected passengers was seen as a “counterweight” to discourage airlines from abusing the practice.

He also proposed the reimposition of an overbooking cap of five to 10 percent.