I haven’t done an entry in this series for a long time, and honestly when I got this email from a reader, I didn’t think I’d be doing it here either. But then, it turns out, the answer is far more interesting than I expected.
Let’s start with the question from William…
I haven’t seen this before. Has Southwest quietly changed its overbooking policy? I’m always game for a voluntary bump, but there’s no way I’ll do this for $30. Could they give that amount to me in rolled up pennies as an alternative, maybe? I guess Southwest is looking for people who wanted to change, but the fares were too high.
He included a screenshot of an email where indeed he was offered $30 if he wanted to change his flight. I’ve seen other airlines do this, but I, like William, assumed Southwest wouldn’t do this since it doesn’t overbook. My guess at the time was that he was just downgauged from a B737-800/-8 to a B737-700, so they had to offload some passengers. But then I got the same email.
To be fair, this wasn’t the exact same email. Mine was only $20 instead of $30. But I was always scheduled on a B737-700, so this couldn’t have been a downgauge. Is Southwest overbooking again? No. No it’s not.
The dots finally connected when this press release from Volantio came out on October 15. Apparently, Southwest will send emails to customers on high-demand flights to try to get them to move on to a different option. This is what Volantio apparently calls “Post-Booking Revenue Management.” Maybe that’s an industry term and I’m just not aware of it, but it does make sense.
As I see it, the idea is that within a week of travel, Southwest may have regrets. If it sold cheap seats and demand remains strong, it could have sold those seats for more money. So, it will open up flexibility for travelers. Not only will it allow them to change for free, but they’ll throw a small enticement in. In my case, it was $20 in future credit. In William’s case, it was $30.
I can’t imagine any traveler being swayed by the small amount of credit. This is more about finding the traveler who maybe wanted to switch anyway. In that case, it should be a no-brainer… if it was implemented better. As you see in that email, if you switch, you will lose any upgraded/EarlyBird boarding that you purchased. You don’t even get your money back. You just lose.
This is a temporary issue, of course, since assigned seating comes in January. But I am rather curious to see how they decide to handle it when people have paid for Extra Legroom seating when the time comes.
For me, this was a non-starter anyway. I didn’t have flexibility on time. But Southwest did give me three options in case I did. The first two were ridiculous since they were two full days earlier, but the third was just a morning flight that same day. I can see that being appealing to some people.
In this case, I paid somewhere around $170 one way. Right now, the cheapest ticket on that flight is selling for $240. If I can move to a different flight, even if you count the $20 credit as cash, they still stand to make an extra $50 if they can resell it.
This requires the system to be reasonably good at predicting if a seat can be resold or not, but this is also not new technology. There is a track record. I was offered the same thing by Alaska earlier this year. I just assumed it was related to overbooking, but there’s no reason it has to be.
This feels like a nice little opportunity to juice revenue just a bit by offering something that should only be viewed as a benefit to the customer. I say it “should” be viewed that way, because the current implementation that takes away your priority boarding has an absolute downside. Hopefully that will change in January. If the math works right, the upside is there for the airline.
So, that’s the answer, William. Thanks for leading me to learn more about exactly what was going on here.
