Airline Capacity and Passenger Bids
The Matching Supply and Demand blog highlights an interesting article from The Economist on Delta Airlines. They’ve been experimenting with allowing passengers to bid on the privilege of being bumped from overbooked flights.
Airlines typically offer flight vouchers at the gate to encourage passengers to delay their travel to account for overbookings. The gate agents increase the value of the offer until they recruit enough volunteers or until the flight boards, at which point they begin bumping passengers involuntarily.
Delta’s scheme is to have passengers bid against each other during check-in, driving down the cost of the vouchers. The Wall Street Journal has more on the program.