This is huge! Via Bloomberg’s Nikki Ekstein, ‘this week, United Airlines Inc. is quietly unveiling a new technology platform that it will use to manage the problem of oversold flights — and, in the same breath, turn them into a profit opportunity.’ With the new Flex-Schedule Program, United will offer buyouts up to five days in advance. United intends to profit by reselling then your highly-desired ticket in an over-sold flight for a wider profit margin.
Why this is good news for United flyers and United
Overbooking has been sort of a bit of a necessary evil for many years in the travel industry. But not everything about it is negative. FOr starters, it doe shelp drive prices down for customers. But also, it brings about a way to earn e-certs. They could be considered a way of income, especially for those who have to travel at least somewhat frequently. The problem is that generally one has to be there at the gate at the time of boarding in order to volunteer yourself for a bump. But imagine having 2-5 days to make different work, meeting, family arrangements so that you can take that bump without facing any uncertainty and without having to waste time at the airport! That’s what this new initiative offers, in large part thanks to startup Volantio, a revenue and marketing solutions startup in the travel space. Interestingly, they’re based out of Atlanta so I would’ve expected Delta to jump on this first, since they’re so innovative and fancy. Several other airlines are slated to partner with Volantio later this year.
Additionally, think about all the headaches and uncomfortable situations created on a daily basis because of oversold flights. I wouldn’t expect this program to completely eliminate that kind of issues, but if properly implemented it certainly can greatly minimize them. Both passengers and gate agents are set to benefit from this initiative. Less pressure on agents, hopefully will mean better customer service, which would definitely mean happier customers and less bad press.
Here’s what Azim Barodawala, the chief executive of Volantio, has to say about the impact of this technology in United and its customers:
“If you can offer a buyout to a customer in advance, everyone will be happier,” he said. “For airlines, it represents a release valve-a way to shuffle people around when you’re capacity-constrained. This benefits the customer as well, you’re creating choice for them, and that’s what gets me really excited. [Passengers] get the short stick a lot.”
How the process will look like
Here’s how United will think about making offers. “Let’s say the 5 o’clock flight from Chicago to Boston normally sells 12 seats in the three days before it departs,” Bartels said, hypothetically. “If I see that that flight is full a week ahead, I’ll be pretty confident that I can resell any seats that I open up based on my seasonalized historical patterns.”
So he’ll reach out by email to a handful of opted-in passengers — the pilot program will target a limited group of MileagePlus members — offering them seats on the less-desirable 3 p.m. or 8 p.m. departures. (Again, hypothetical.)
Bartels indicates that leisure travelers will be the likely swappers on major business routes. “That’s where we’re more likely to have an alternate option that’s appealing to someone,” he said. And they’re also the routes that executives are likely to need last-minute, no matter the price.
United says it’s not about overbooking
Let’s be clear here, the main reason why United is doing this is because of the opportunity for more profit. Dave Bartels said to Bloomberg that the main goal is to free up a valuable seat and offer it to someone who needs it more. He added:
“It won’t mean we’re overbooking the aircraft more because we have this tool, but I also don’t know why it would lead to less overbooking. It’s too premature to put a number to it. It’s hard to know where it’s going to go, we want to see the volunteer rate, the percentage of people that indicate a willingness, and then the conversion rate upon the offers being sent.”
United will be assessing the impact of this on their balance sheet from now through August, when the pilot is set to end.
In conclusion, I sure hope the numbers add up because I’m willing to play this game. However, I feel like I’m a bit too excited about this…and that’s usually not a good sign. In any case, I’m certainly glad to see that recently United has stepped up its game in using technology to improve their service and providing more options to earn miles, regardless of what some say.