Airlines commonly overbook their flights to avoid revenue losses associated with passenger no-shows as part of their revenue management strategies. Successfully overbooking requires that airlines accurately predict the number of passengers who will not show up for a given flight. In deciding how much to overbook flights, airlines use historical data to identify factors that make passengers more or less likely to show up for their flights; these factors can be passenger or flight specific. For example, according to representatives from an airline industry association, leisure passengers are less likely than business passengers to change their flights at the last minute, because their tickets typically have more restrictions and higher change fees. As a result, according to these representatives, airlines generally oversell fewer seats on flights heavily traveled by leisure passengers, such as flights during the holiday season or flights to common vacation destinations (e.g., Disney World). Similarly, these same representatives said that airlines are less likely to overbook the last flight of the day on a given route because passengers are more likely to show up for these flights. A number of other factors, in addition to overbookings, can lead to airlines denying boarding to passengers. These factors can be driven by safety concerns, operational necessity, or personnel needs. For example, a passenger may be denied boarding for safety or security reasons if they are too intoxicated to fly or if they are unruly (e.g., they get into a fight). Passengers may also be denied boarding to accommodate flight crews that need to get to a different location or U.S. air marshals, who tend to book flights near planned departure times. DOT does not regulate airlines’ overbooking practices, aside from requiring airlines to inform passengers that a flight may be overbooked. Instead, DOT’s regulations primarily focus on oversales, which can be the result of an overbooking and occur when some passengers with confirmed space on a flight cannot be accommodated (i.e., “denied boardings”). Passengers are voluntarily denied boarding if they willingly accept the airline’s offer of compensation, in any amount, in exchange for relinquishing their confirmed seat. Any other passenger denied boarding is considered to have been denied boarding involuntarily. Because of these regulations, airlines generally have a standard process for denying boarding to passengers, both voluntarily and involuntarily, and communicating denied boarding information to passengers. When a flight is oversold, airlines are required to solicit passengers to voluntarily give up their seats, before denying boarding to passengers involuntarily. To encourage passengers to volunteer to relinquish their seat, airlines may offer incentives, such as money or vouchers for future flights. There is no minimum or maximum amount of money or vouchers that the airline is required to offer, and passengers can negotiate compensation amounts. Federal regulation requires that airlines inform each passenger solicited to volunteer for denied boarding whether they are in danger of being involuntarily denied boarding and, if so, the compensation the airline is obligated to pay. In cases where a flight is oversold and airlines do not get enough volunteers who are willing to relinquish their seat, they will select passengers to give up their seats involuntarily—sometimes referred to as being “bumped.” Airlines are required by regulation to establish boarding priority rules detailing the factors they consider when selecting passengers to be denied boarding involuntarily. These factors may include when the passenger checks in, the fare paid, and the passenger’s frequent flyer status. However, according to DOT’s website, the criteria cannot subject a passenger to any unjust or unreasonable prejudice or disadvantage. For example, an airline cannot use a passenger’s race when making decisions about denied boardings. Further, some airlines make exceptions to their boarding priority rules for passengers with disabilities, including generally not denying them boarding. Airlines are required to compensate certain passengers who are denied boarding involuntarily. Minimum compensation amounts are set in regulation and, as shown in table 1 below, vary based on the price of the ticket, the length of time the passenger is delayed reaching their destination, and whether the flight’s arrival airport is domestic or international. Airlines generally must provide compensation by cash or check when the passenger is denied boarding involuntarily, in addition to a written statement explaining the terms, conditions, and limitations of the compensation, and describing the airlines’ boarding priority rules and criteria. The total number of passengers denied boarding—voluntarily or involuntarily— generally decreased from 2012 to 2018. Moreover, denied boardings represented a small percentage of the total number of passengers who boarded flights. On an annual basis, denied boardings accounted for between about 44 (in 2018) and about 100 (in 2012) passengers per 100,000 actual boardings—a rate of less than 0.1 percent of actual boardings. As illustrated in figure 1, of these passengers denied boarding, most are voluntary. For example, in 2018, for every 100,000 actual boardings, about 43 passengers were voluntarily denied boarding and about one passenger was involuntarily denied boarding. Passenger complaints submitted directly to DOT about denied boardings also generally decreased from 2012 to 2018, relative to total complaints and passenger boardings. As shown in figure 2, the number of passenger complaints to DOT about denied boardings represented a small percentage of total passenger complaints from 2012 to 2018, annually accounting for less than 4 percent of all complaints. On an annual basis, from 2012 through 2018, the number of complaints about denied boardings reported to DOT ranged from about 410 (in 2018) to about 650 (in 2015). We have previously reported, however, that DOT’s complaint data provide an incomplete picture of all passenger complaints because passengers may not be aware that they can report complaints to DOT, and DOT’s complaint data do not include complaints from passengers submitted directly to airlines. Specifically, in 2018, we reported that across all complaint categories, DOT estimated it received one complaint for every 50 complaints the airline receives. In an effort to avoid denied boardings, airlines can, in some cases, accommodate passengers in a different section of the aircraft, either by upgrading or downgrading passengers. A revenue management specialist and representatives from an airline industry association we interviewed said that, with limited exceptions, airlines generally do not overbook their premium cabins. Our review of DOT data found that in recent years, until 2018, airlines have generally upgraded fewer passengers to avoid denied boardings. According to representatives from an airline industry association, the decrease in the number of passengers upgraded is likely because airlines have fewer empty premium seats in their first-class cabins than in past years because they are selling more of these seats. For example, a stakeholder said that airlines are now selling upgrades on the day of departure and allowing more customers to use miles to upgrade their seat, leaving fewer available empty premium seats when flights are oversold. DOT permits airlines to downgrade passengers, as long as the airline refunds the passenger the difference in fares. In practice, representatives from an airline industry association said that when a passenger in a premium cabin is to be denied boarding, airlines generally offer the passenger the option of a premium cabin seat on another flight or to downgrade to the economy cabin along with compensation for the fare differential. In our review of seven airline’s contracts of carriage, five explicitly stated that if passengers are downgraded, they will be entitled to an appropriate refund, and the other two airlines do not include information about downgrades in their documents because they do not have different cabins of service. According to representatives from an airline industry association, the refund amount is calculated based on the average difference of fare paid between the two cabins, and it is dependent on the flight’s origin and destination. While the average amount of compensation for passengers involuntarily denied boarding has increased in recent years, a smaller percentage of such passengers received compensation. As previously mentioned, in certain situations, passengers who are denied boarding involuntarily may not be eligible for compensation. For example, airlines are not required to compensate passengers if an airline uses a smaller aircraft than originally planned for operational or safety reasons and thus cannot accommodate all confirmed passengers. Our review found that the percentage of passengers that were involuntarily denied boarding who qualified for compensation decreased from 76 percent in 2012 to 64 percent in 2018. Aircraft substitution may be contributing to fewer passengers being eligible for compensation, according to DOT data. For example, one airline that does not overbook experienced a number of operational issues in 2016 and 2017 that forced it to operate many of its flights with smaller aircraft. As a result, the airline had to deny passengers boarding involuntarily, and these passengers were not eligible for compensation. As figure 3 shows, from 2015 to 2018, most of the passengers who were denied boarding involuntarily and were not eligible for compensation were ineligible due to airlines using smaller aircraft on some flights. Although the total number of involuntary denied boardings decreased from 2012 to 2018, any passenger involuntarily denied boarding could face varying levels of disruptions to their travel plans. Passengers who are rebooked on the next scheduled flight may encounter minimal inconveniences or expenses. However, other passengers may face more significant travel disruptions, according to representatives from consumer advocate organizations we interviewed. Our review of a non- generalizable sample of passenger complaints submitted to DOT in May and June 2019 also identified instances where passengers reported incurring significant costs in terms of time and money as a result of being denied boarding involuntarily. For example, one passenger reported missing a wedding and paid about $450 in additional hotel costs. In another instance, a passenger missed their cruise after being denied boarding involuntarily. Consumer advocates also told us that passengers may incur costs such as lodging, meals, and transportation, or might miss work as a result of being denied boarding involuntarily. Airlines’ ability to rebook passengers who are involuntarily denied boarding on the next available flight can be limited. Over the past several years, airlines have increasingly flown with fewer empty seats— particularly on certain routes—than was typical in the past, according to DOT data. With fewer open seats, airlines have limited options to rebook passengers who are denied boarding. For example, across all departing flights at Hartsfield-Jackson Atlanta International Airport in 2018, on average, 86 percent of seats were filled. These data represent averages across all flights and stakeholders said that factors such as time of day, day of the week, season, and flight origin or destination can affect the number of empty seats on a particular flight. For example, flights on Sunday evening tend to be fuller than flights on Tuesday. One airline revenue management specialist estimated that about 25 to 30 percent of all flights have no empty seats. Representatives from consumer advocate organizations that we interviewed said that planes are operating at record-high levels of capacity, and one advocate stated that no transportation system is designed to operate at or near capacity all of the time, which they believe some airlines are doing on certain routes. In addition, we have previously reported that service to smaller communities is generally less frequent, providing airlines with fewer opportunities to rebook passengers than for more traveled routes. Airlines may also not be able to rebook passengers who are denied boarding on a different airline that has seat availability if they lack commercial agreements to do so. Further, according to representatives from an industry association representing airlines, while most airlines have agreements in place that allow passengers to be rebooked on a different airline, these agreements are primarily used to accommodate passengers on delayed and canceled flights. According to these representatives, passengers who are denied boarding are almost always re-accommodated on the same airline, given that the customer typically volunteers to take a later flight on the same day. Our review of seven airlines’ contracts of carriage found that four of them have documented policies in place to rebook passengers who are denied boarding on a different airline. Our review of DOT data found that fewer passengers are being rebooked on flights that arrive within an hour of their original flight. Specifically, in 2012, 11.5 percent of rebooked passengers were accommodated on such a flight, compared to 0.11 percent in 2018. While DOT collects data on passengers who are delayed less than an hour, no other information is available to measure the amount of time a passenger is delayed when they are denied boarding. However, based on our review of passenger complaints, we found instances where passengers reported having to wait until the following day to board a flight with available seats. Decreases in involuntary denied boardings are due in part to recent airline actions. As mentioned previously, involuntary denied boardings can be costly for both passengers whose travel plans are disrupted, and airlines that have to compensate passengers for such disruptions and then face criticism for denying boarding to passengers with confirmed seats. As a result, airlines have taken a range of actions, primarily intended to reduce such incidents. Some of these actions also provide additional incentives for passengers to volunteer to be denied boarding. Moreover, stakeholders, including consumer advocates and an association representing airlines, agreed that voluntary denied boardings are preferred to involuntary denied boardings, given that airlines and passengers willingly accept the outcome. Reducing the rate or eliminating overbookings. Some airlines have reduced their rate of overbooking or eliminated them altogether in an effort to reduce voluntary and involuntary denied boardings, according to stakeholders and our prior work. In our 2018 report, representatives from three airlines told us their airline had reduced or stopped overbooking flights. Our review of seven airlines’ customer service documents found that two airlines explicitly stated that they do not overbook their flights. Improving the ability to predict no-shows or rebook passengers. According to representatives from an industry association representing airlines, airlines have made investments to improve their software for predicting the number of passenger no-shows in an effort to reduce voluntary and involuntary denied boardings. These representatives also told us that airlines have hired additional personnel dedicated to more precisely forecasting no-show rates and proactively identifying rebooking options for passengers who are denied boarding. Improving communication with passengers. Some airlines have taken steps to notify passengers about potential denied boardings earlier in the travel process—in some cases before travelers have left for the airport—in an effort to encourage volunteers, according to stakeholders we interviewed. These stakeholders said that providing advance notice likely further reduces any burden on passengers associated with changing their travel plans. In 2018, five of the nine airlines we interviewed told us they had begun soliciting volunteers to give up their seat earlier in the process. More specifically, according to representatives from an industry association that represents airlines, some airlines call passengers prior to their arrival at the airport to gauge their willingness to give up their seat. Other airlines solicit volunteers at the check-in kiosk, which limits the need for airlines to identify passengers during the boarding process at the gate. None of the stakeholders we interviewed described any communication methods that were specific to passengers with disabilities. Nevertheless, as previously mentioned, four airlines (out of seven) explicitly state in their contracts of carriage that they generally do not deny boarding to passengers with disabilities. Increasing and diversifying compensation for passengers. Some airlines have offered additional incentives or increased compensation amounts to encourage passengers to voluntarily give up their seat. While airlines have historically provided passengers with travel vouchers to solicit volunteers, some have started offering alternative forms of compensation, such as gift cards for Amazon and other retailers, iPads, or travel vouchers with fewer restrictions or that also cover ancillary fees. Our review of DOT data indicates that relative to the number of passengers denied boarding involuntarily, more passengers have volunteered to give up their seat, lessening the need to deny passengers boarding involuntarily. For example, in 2012, for every one passenger denied boarding involuntarily, about nine volunteered to be denied boarding. In contrast, in 2018, for every one passenger denied boarding involuntarily, about 33 volunteered to be denied boarding. Providing passengers with the opportunity to propose acceptable voluntary denied boarding compensation. Some airlines solicit passengers with flexible travel plans to identify compensation amounts they would willingly accept in exchange for voluntarily giving up their seats and taking another flight. Once passengers submit their required compensation amount to the airline, the airline can then use that information to select passengers with the lowest amount of required compensation to accept a denied boarding. This process allows airlines to, among other things, potentially avoid involuntary denied boardings, and identify which passengers require the least compensation in exchange for their travel flexibility. Airlines conduct this process on their website, via their mobile app, or at the check-in kiosk. In some cases, passengers who would consider changing their plans in exchange for compensation provide the airline with a specific dollar amount that they would be willing to accept to give up their seat. In other cases, airlines require each passenger to select a predetermined amount of compensation that they would accept to give up their seat, as illustrated in figure 4. For example, based on the figure below, an airline that oversold its flight would select a passenger who volunteered to give up their seat in exchange for $250, assuming at least one passenger selected that amount. If no passengers selected that amount, the airline would identify a passenger with the next lowest amount—in this case, $350. Our review identified at least three airlines that use this type of process to solicit volunteers to give up their seats. Providing additional tools to employees. According to stakeholders we interviewed, airlines have given their employees more discretion regarding the offers they can make to encourage passengers to volunteer to be denied boarding on an oversold flight, or provide training on handling such incidents. While representatives from both consumer advocate organizations we interviewed generally supported some of the airlines’ actions to manage oversold flights, they also identified additional actions that airlines or DOT could take. Both consumer advocates we spoke to would like to see airlines increase transparency and passenger education related to denied boarding compensation. For example, these advocates believe that prior to agreeing to be voluntarily denied boarding, airlines should be required to inform passengers: (1) of the current compensation amounts for involuntary denied boardings, and (2) that compensation can be provided by cash or check (as opposed to a voucher). Having such information would allow passengers to make more informed decisions about the compensation they would willingly accept to be voluntarily denied boarding. Additionally, one consumer advocate said explicitly that they would also like airlines to inform passengers who are involuntary denied boarding that compensation amounts set by DOT are minimum amounts. Regarding potential additional actions, the FAA Reauthorization Act of 2018 required that DOT issue a rulemaking clarifying, among other things, that the compensation amounts set by DOT for involuntary denied boardings are the minimum compensation amounts that passengers can receive. In October 2019, DOT officials indicated that DOT intends to issue its final rule in July 2020. Moreover, in November 2018, we made three recommendations to DOT to improve its passenger education efforts by, among other things, capturing feedback from passengers directly, and identifying available short- and long-term budgetary resources for these efforts. DOT agreed with our recommendations and is in the process of implementing them. More broadly, both consumer advocates we interviewed called for an end to overbookings. This could be achieved either voluntarily by airlines or in regulation by DOT. These advocates said that overbooking is an outdated practice that protected airlines from high no-show rates during a time when passengers could make multiple reservations and did not incur change fees. Given that this is no longer the case, it is not necessary for airlines to overbook their flights, according to these consumer advocates. They also pointed out that airlines have significant flexibility in their business operations, including, denying boarding when a flight is overbooked, or changing flight schedules. In contrast, passengers have little, if any, recourse if they need to change their travel plans. Most tickets have restrictions that prevent passengers from making changes to their flights without incurring high change fees. Consumer advocates believe that eliminating overbooking would have limited effects on airlines, given the restrictions on passengers’ tickets. According to three airline revenue management specialists, if airlines were prohibited from overbooking flights, they would likely end up operating aircraft with more empty seats, compared to current trends. Moreover, they also noted that if flights were less full, there could be certain negative implications for airlines and passengers. For example, when fewer seats on a flight are filled with paying passengers, airlines’ average costs per passenger are higher because many aspects of airlines’ operational costs—such as salaries for crew, mechanic services, and airport landing fees—are generally the same, regardless of the number of passengers onboard. These same revenue management specialists also noted that a greater number of empty seats will generally decrease airline’s revenue. One of them estimated that the reduced revenues could amount to tens of millions of dollars. Some airlines would also likely change their revenue management practices, according to airline revenue management specialists. Those changes would largely focus on how airlines price their tickets. While two airlines have made a business decision not to overbook and have accepted the financial trade-off, revenue management specialists said that eliminating overbooking would be difficult for other airlines. In particular, all three revenue management specialists agreed that if airlines were prohibited from overbooking, some airlines may offer fewer discounted fare tickets. Two revenue management specialists also said that it is likely that airlines would increase the average fare across all tickets slightly to account for the increased costs and potential lost revenue. Finally, one revenue management specialist also said that airlines might add additional restrictions on tickets, such as by increasing penalties associated with a passenger not showing up for their flight or cancelling their ticket at the last minute. Moreover, even if airlines stopped overbooking, some passengers would still be denied boarding because factors other than overbooking—including some that are beyond the airline’s control—can lead to denied boardings. We provided a draft of this report to DOT for review and comment. DOT provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Transportation, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have questions concerning this report, please contact me at (202) 512-2834 or VonahA@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix I. Andrew Von Ah, (202) 512-2834 or VonahA@gao.gov. In addition to the individual named above, other key contributors to this report were: Ed Laughlin (Assistant Director); Amy Suntoke (Analyst-in- Charge); Amy Abramowitz; Sarah Arnett; Melissa Bodeau; Colson Campbell; Lori Fields; Dave Hooper; Mary-Catherine Overcash; Malika Rice; Pam Snedden; Melissa Swearingen; and Elizabeth Wood.

Summary: Some airlines overbook their scheduled flights (intentionally sell more seats than are available) to compensate for passenger no-shows. It is not illegal for airlines to overbook their flights. However, it can result in an “oversale” where airlines cannot accommodate all passengers on a particular flight. In response, airlines may have to deny boarding to some passengers. DOT is responsible for ensuring airlines adhere to their denied boarding practices as part of its consumer protection enforcement responsibilities. The FAA Reauthorization Act of 2018 included a provision that GAO examine airlines' oversales practices. This report focuses on denied boardings—the result of an oversale—and describes (1) trends in denied boardings and (2) airlines' actions related to denied boardings and mitigating the effects on passengers. GAO analyzed data on denied boardings and related passenger complaints submitted to DOT from 2012 through 2018, and reviewed seven airlines' publicly available documents describing their overbooking and denied boarding policies. Airlines were selected to generally include the largest airlines that GAO previously reported had varying practices on overbookings and denied boardings. GAO also reviewed relevant statutes and DOT regulations, summarized GAO work published in 2018 describing airlines actions to reduce denied boardings, and interviewed DOT officials, one airline industry association, two consumer advocate organizations, and three airline revenue management specialists. The selection of stakeholders was non-generalizable and based on inclusion in prior GAO work and their relevance regarding denied boarding practices. The number of passengers denied boarding (not allowed to board flights they have tickets on) generally decreased in recent years, according to Department of Transportation (DOT) data. Combined, on an annual basis, voluntary and involuntary denied boardings account for less than 1 percent of actual passenger boardings. Voluntary denied boardings. As shown below, most denied boardings are passengers who “voluntarily” gave up their seat for compensation of the airline's choosing, such as airline vouchers. Passengers can negotiate compensation amounts. For every 100,000 actual boardings in 2018, about 43 passengers were voluntarily denied boarding. Involuntary denied boardings. All other denied boardings occur “involuntarily.” These passengers may be eligible for compensation in an amount set by DOT. For every 100,000 actual boardings in 2018, about one passenger was involuntarily denied boarding. While few denied boardings are involuntary, these passengers may encounter significant costs and travel disruptions. GAO's review of passenger complaints submitted to DOT showed instances where passengers involuntarily denied boarding reported missing significant events—e.g., a wedding or a cruise—and incurring additional costs. Airlines can face challenges rebooking passengers, such as those flying to smaller communities, exacerbating these disruptions. Passengers Denied Boarding Voluntarily and Involuntarily per 100,000 Actual Boardings, 2012-2018 Airlines have taken a range of actions, aimed at reducing involuntary denied boardings. Actions include reducing overbookings; requesting volunteers earlier (e.g., at check-in); and increasing compensation for volunteers. While consumer advocates GAO interviewed generally supported these actions, they advocated for an end to overbooking. Three airline revenue management specialists said if airlines were prohibited from overbooking, some airlines may offer fewer discounted fare tickets. Two of these specialists also said airlines might also slightly increase average fares across all tickets.