No-show Rate and Overbooking
Due to the no-show rate, the airlines are granted to sell more seats than the physical capacity of the flight. For example, if the flight has a physical capacity of 100 seats, and it is expected that four percent of the passengers do not show up for the flight, the airline can sell about 104 tickets on the flight. As a result, about 100 passengers are expected to show up for the flight, and the flight will depart with no empty seats. This action by the airline is known as ‘overbooking,’ which allows the airline to sell more seats than the physical capacity of the flight to account for the no-show rate. Overbooking is not illegal, and most airlines overbook their scheduled flights to a certain level in order to compensate for ‘no-shows.’ When the airline overestimates the no-show rate and overbooks their flights, over sale occurs. A number of passengers that is more than the physical capacity of the flight might show up. Accordingly, some passengers have to be left behind or ‘bumped’ out of the flight. When an over sale occurs, passengers who are not in a hurry are offered compensation in exchange for giving up their seats voluntarily. Those passengers bumped against their will are, with a few exceptions, entitled to compensation.