BUMPING

(Very sorry. By mistake, published  my draft version.  Here is the final version.)

 

Airline companies almost always overbook their flights whenever they can. Why? Because they know that statistically around 15% of the passengers who have confirmed reservations do not show up for their flights.

Airline companies know this and an empty seat is money lost so they overbook. Sometimes overbooking can backfire on airline companies…like whenever more passengers with confirmed reservations show up than anticipated and there aren’t enough seats on the plane for everyone.

Whenever this situation occurs, the airlines will make an announcement at the gate asking if any passengers would like to voluntarily give up their seat and take the next flight. The airline will offer incentives for the passenger(s) who volunteer for ‘bumping’.

Bumping (or getting bumped) is when you voluntarily give up your seat on the flight to take a later flight with the incentives.

The average incentive is a one class upgrade to business class or first class on the next available flight AND one free roundtrip ticket from anywhere to anywhere that the airline will fly domestically. A pretty good incentive.

Some airlines are cheapskates. They will start with a paltry $50 voucher to be used for future travel on their airline. However the passengers know better and no one will accept such a cheap offer.

I know a frequent commentor on this blog who volunteers for bumping all the time. I mean every…single…time he flies! When he checks in at the airport, he voluntarily tells the airline clerk “if you’re overbooked for this flight and need to bump someone, you can call me first”.

Why I am writing about this topic now?

The practice of bumping has come to educational institutions also. Now a famous university is paying students not to enroll. M.I.T. (Massachusetts Institute of Technology) admits 400 students into their MBA program every year. They usually send admission letters to more students than the actual seats that are available (i.e. overbooking or overaccepting). This is due to a few (accepted/admitted) students not showing up for various reasons such as getting admitted to another school, losing interest in pursuing an MBA, getting a job, etc.

This year more than 400 students showed up at MIT. Similar to airline companies offering incentives to passengers who want to be bumped, MIT is offering cash incentives to those students who are willing to wait until next year.

MIT started with low cheapskate offers (like certain airlines) and of course they had very few takers. Eventually, MIT got enough volunteers who were willing to enroll next year. MIT ended up offering $20,000 to each student. This money will be applied towards their tuition fees next year. The tuition cost for the MIT MBA program is $58,000 per year. A 34% discount is not bad. Not bad at all.