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 help of its new Flex-Schedule Program, the airline is piloting a way to buck the trend of involuntary bumping—the term for kicking passengers off oversold flights—without necessarily offering four-figure payouts to passengers at the gate, or curbing their practice of overselling inventory. (The airline suffered a publicity black eye earlier this year when police dragged a man off an overbooked plane, and has since promised to offer high-price rewards to fliers who agree to change flights at the last minute.)
Instead, it’ll simply offer buyouts earlier—up to five days in advance. The upside for United? The chance to resell your ticket at a wider profit margin.
How It Works
In partnership with Volantio, a third-party aviation technology startup based in Atlanta, United will soon begin sending e-mail newsletters with subject lines such as “Are You Flexible with Your Travels to Los Angeles?” Inside, travelers will have the option to sign up for potential rewards—so long as they’re willing to budge a little on their flight itineraries.
Only those who book on United.com and opt in to receive marketing messages will be eligible for the sign-up offer—and signing up doesn’t guarantee that you’ll be asked to change your flight. If it’s looking like your seat has turned into a hot commodity, though, you’ll be offered the chance to tweak your itinerary in exchange for a travel voucher up to $250. And tweak is the key word: You’ll never be asked to change dates or airports, and your seat preferences will carry over, with clear indicators if you’re taking a downgrade from Economy Plus to regular-old Economy. (Downgrades will be rare, but upgrades will be even rarer.) Accept the bid if you wish, and you’ll be rebooked within 24 hours.
It’s Not About Overbooking
After months of negative press—the doctor who was dragged off the plane, the infant whose $1,000 seat was inadvertently resold—United’s image has taken a nosedive.
According to Azim Barodawala, the chief executive of Volantio who created the technology and brought it to United, the Flex-Schedule Program could be an opportunity to change the narrative with the help of innovative technology, rather than cumbersome regulations. “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.”
But Dave Bartels, vice president for pricing and revenue management at United, doesn’t see the Flex-Schedule Program as “having a lot to do with overbooking.”
Although there will be times when the program helps to move people off an overcrowded plane—whether it was oversold, lost capacity due to an aircraft change, or had to reduce weight loads due to hot weather—he told Bloomberg that the main goal is to free up a valuable seat and offer it to someone who needs it more. “It won’t mean we’re overbooking the aircraft more because we have this tool,” he said. “But I also don’t know why it would lead to less overbooking.”
A Boon for Business, and Business Travelers
When Barodawala first brought his idea to United, he used a metaphor involving three egg cartons, each lined up along their short sides. He filled them with a mixture of red- and green-dyed eggs: bargain shoppers and deep-pocketed business travelers. “What would you say,” Barodawala asked, “if you could move some of these red eggs [to empty slots in a different carton], and just replace them with green eggs?”