There is a simple way to solve the problem of airline overbooking: sell “standby” tickets above the plane’s capacity. The problem is airline customers ordinarily think they have a guaranteed seat on the plane; they are unaware of the fine print saying otherwise. Airlines should sell “guaranteed” seats up to the capacity of the plane for one price, and additional “standby” seats for a small discount. The airline can then boot standby passengers without much fuss if needed. After all, those passengers risked delay in exchange for a lower price. In this way, passengers self-select based on how important it is that they arrive on time. No complicated auctions, compensation schemes or bloody altercations required. Passengers feel like they get what they paid for, and the airlines get to keep overbooking their flights.
John Bowlin, Parker
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