Delta is turning the flight-bumping game into a reverse auction

Courtesy Marginal Revolution

Overbooking flights is common, and usually goes unnoticed because there are enough no-shows to leave open seats for any passenger who wants one. But when too many ticketed passengers check in, airlines ask for volunteers to switch to a later flight. By federal law, you're guaranteed some compensation—but it's up to the airline how much. The typical airline will offer a voucher worth a few hundred dollars to your next flight.

Enter, Delta. At some airports, the airline has been experimenting with a cheaper method of spotting passengers who are willing to give up their seat: reverse auctions. Let's say you go to an airport kiosk to check in and print out your boarding pass. You may see this prompt: "Enter the dollar value of the travel voucher you would be willing to accept as compensation for volunteering your seats. (Tip: Delta accepts lower bids first.)"

The bad news is that naive fliers may settle for too little money. As Gadling puts it, if airlines like Delta get enough suckers to settle for less than $100, they could save a fortune in vouchers.

If no one volunteers, gate agents must pick some passengers to be bumped against their will. Federal law sets compensation guidelines, and fliers could get as much as $400 or $800, depending on the circumstances. (See our earlier post, "Government slams airlines for bumping passengers.")

A better idea for travelers is Optiontown's Flexibility Reward Option, available for selected Air Canada and Air Baltic fligths. For a couple of years now, those airlines have allowed passengers to visit the site Optiontown and volunteer in advance to be bumped—for a guaranteed cash reward.

Here's how it works: Pick an alternate flight you'll be fine with flying, and receive a reward of up to $7 right away. If the airline does switch you to that alternate flight because of overbooking, you will receive $50. While the amount is small, you have the reassurance of being placed on a specific flight you know you'll like, and you get at least some cash in hand no matter what happens.

Don't want to be bumped at all? Try and check in as early as possible for your flight.

[Delta explains the new system on its blog. Readers of the blog Marginal Revolution were the first to notice this program, and our friends at The Consumerist wrote about it yesterday.]


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