TRM 409.

01 BUSINESS ETHICS GROUP PRESENTATION

OVERBOOKING ISSUE IN AIRLINE INDUSTRY

GROUP MEMBERS: NE E ROMAN GNCE MALAN YASEM N AKSOY

Content
What is Overbooking? Why do Airlines Overbook flights? How it works? Voluntary Bumping vs. Involuntary bumping y Compensations y Complaints y Cost-benefit y Justice Theory y Fairness Theory y Rights Theory
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What is Overbooking?

Why Do Airlines Overbook Flights?

To compensate for No-Shows Seat Utilization More Profit

How Airlines Make Overbooking?

Holiday season Statistical data of no-shows Airline market current position

Involuntary Bumping Vs. Voluntary Bumping

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What is Voluntary Bumping?

What is Involuntary Bumping?

Overbooking and Voluntary Bumping

Before an airline involuntarily bumps passengers on an overbooked flight, they will first ask for passengers who are willing to voluntarily give up their seat. Passengers considering volunteering to give up their seat should be aware of two important considerations. First, they will no longer be compensated under the denied boarding or involuntary bumping rules that are in effect for that flight. Second, a passenger who voluntarily gives up their seat is in a position to negotiate with the airline for other compensation that could be more valuable to the passenger.

Overbooking and Voluntary Bumping

I fly twice a month and ALWAYS fly United. Why do I fly United? Because they are always so overbooked that I know they'll be asking for volunteers to take the next flight. With a little patience you might never pay for another flight again. I've been flying on a voucher and given another for being bumped. No exaggeration, I've received $5000 in voucher in 2007. Remember, patience is a wondrous virtue.

THY Overbooking Policy

First, the company asks for the passengers who are willing to give up their seat. y Whether they find a volunteer or not, they will give compensation for the passenger who can not fly. y They will arrange the flight within the shortest possible time. y According to the waiting time, accommodation, food and beverage and transportation facilities are free of charge.
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THY s Compensation Amounts

Overbooking and Involuntary Bumping

Most involuntarily bumped passengers are subject to the following minimum compensation schedule:
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No compensation if alternative transportation gets the passenger to the destination within one hour of the original scheduled arrival. One-way fare up to a maximum of $400 for substitute domestic flights that arrive between 1-2 hours after the original scheduled arrival time or for substitute international flights that arrive between 1-4 hours after the original scheduled arrival time. If the substitute transportation is scheduled to get you to your destination more than 2 hours later (internationally), or if the airline does not make any substitute travel arrangements for you, the compensation doubles to a maximum of $800.

exceptions
schedule does not apply to charter flights, to scheduled flights operated with planes that hold 30 or fewer passengers or to international flights inbound to the United States.  If a passenger can't be accommodated to their satisfaction, they may be eligible to request a refund for the remaining part of the trip, even if the trip were on an nonrefundable ticket.
 Compensation

Conditions for compensation;

  

The passenger must have a confirmed reservation, Not to miss ticketing deadline, Each airline has a check-in deadline, which is the amount of time before scheduled departure that the passenger must present himself to the airline at the airport.If the passenger misses the deadline, he/she may have lost his/her reservation and his/her right to compensation if the flight is oversold.

Complaints
If for some reason the passenger believes that the airline's response to overbooking was not satisfactory, he/she may want to complain to; y the Airline Company y the Authorities. If the passengers flight was on a U.S. airline or on a flight to or from the U.S., the passenger can also use; y the AirSafe.com Online Complaint Form and AirSafe.com will forward his/her complaint y to the U.S. Department of Transportation
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One example of the complain form which is prepared by U.S. AirSafe.com Online Complaint Form
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Please fill out the relevant information below and submit the form. Your complaint will be reviewed and either published in AirSafe.com's complaint site FlightsGoneBad.com or forwarded to an appropriate organization such as the US Department of Transportation. Prior to publication, your submission may be edited for clarity and to protect your personal information. Please review AirSafe.com's privacy policy if you would like additional details of how your information will be used and your privacy protected. Name: Street: City: State/Province: Zip/Postal Code: Country: Phone: Email: Complaint Information Airline Name: Flight Number: Location/Flight Leg: Date:

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Complaint Categories (Choose one or more) Delays and other Flight Problems Overbooking Reservations/Fares/Boarding Cancellation Fares Refund Baggage Safety Security Frequent Flyer Program Customer Service Disability Advertising Discrimination Animals Other (specifiy)

Write Your Complaint Below For advice on what to say, please review the Complaints Tips Page When you are done, please choose a button:

CostCost-Benefit Analysis
All parties benefit, and no party loses. All passengers either complete their flights or are recompensed by a sum which they value more than the immediate completion of the flight. y The airlines could also gain, because they would be able to overbook to a higher degree than at present and hence fly their planes closer to seat capacity. (Falkson,1969)
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Benefits for Airlines;

The number of empty seats on sold-out flights reduced, Capital asset utilization increased
(the total revenue earned for every dollar of assets a company owns)

Involuntary oversales reduced

Costs for Airline

The costs that airlines have to pay to passengers who are bumped off of flights for which they have already purchased tickets affect revenue substantially. y Compensation for overbooking affects around 250,000 passengers (0.1% of total).
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Kant s Categorical Imperative

with individual rights of the person denied something he was promised done as a normal practice to ensure higher daily profit would be difficult to justify promises destroys the very basis of making a promise in the first place
Breaking Overbooking Concerned

Kant: Overbooking could be acceptable if . . .

At the time the reservation is made, the traveller is told that a reservation does not actually guarantee a flight, only a high likelihood of a flight (no promise has been made)

JUSTICE
States that we should treat each other fairly
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Rawls Veil of Ignorance What would you decide is acceptable if you were to be the weary traveler who discovers the guaranteed ticket is not guaranteed?

DISTRIBUTIVE JUSTICE
The Capitalist Justice The passenger who pays more,except being volunteer, gets on the plane .To express ,the passenger with higher fares,gets more burden as monetary,so he/she should get more benefits.So,the case is justice in terms of capitalist view.

COMPENSATORY ETHICS
must be compensated for the loss and inconvenience.
Wronged traveller

FAIRNESS
In considering what is fair, you must ask questions such as: what has the hotel lost and what has the passenger lost? What is the compensation costing the company? What is the denial of a ticket the potential guest?

VIRTUE ETHICS
The airport is a human community. Traits/virtues include: honesty, integrity,

tolerance, fairness, and cooperation.

Overbooking raises concerns about how

well an airline company fosters honesty, integrity, and fairness if it does not keep its word to its guests. Any enterprise that engages in overbooking needs to be sure that this practice is honest and open and it does not promote an ethic of deception or irresponsibility

RIGHTS
When a flight is oversold and there are not enough volunteers, some airlines bump passengers with the lowest fares first. y Once a passenger have purchased her/his ticket, the most effective way to reduce the risk of being bumped is to get to the airport early.
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If the passenger is bumped involuntarily he/she has the right to insist on a check if that is her/his preference. The government's denied boarding regulation spells out the airlines' minimum obligation to people they bump involuntarily.

THANK YOU VERY MUCH FOR YOUR ATTENTION!