• Home
  • Reviews
    • Flight Reviews
    • Hotel Reviews
    • Lounge Reviews
    • Trip Reports
  • About
    • Press
  • Contact
  • Privacy
  • Award Expert
Live and Let's Fly
  • Home
  • Reviews
    • Flight Reviews
    • Hotel Reviews
    • Lounge Reviews
    • Trip Reports
  • About
    • Press
  • Contact
  • Privacy
  • Award Expert
Home » Travel » The Solution to Avoid IDBs: VDB Auctions
Travel

The Solution to Avoid IDBs: VDB Auctions

Matthew Klint Posted onJune 8, 2010 1 Comment

The Wall Street Journal has an excellent editorial today arguing that rather than more government rules, airlines should adopt an auction-style system to deal with overbooked flights.

…In the first quarter of this year, some 23,380 passengers were forced to give up their seats, a 17% increase over last year and the highest rate in at least a decade as airlines try to serve passengers with fewer flights. Bumping only affects two of every 10,000 passengers, but that is small consolation for those who miss appointments or family obligations…

These stats amaze me. Unfortunately, law school has kept me busy and I’ve done only about half the amount of travel at this point of the year than I did last year. Still, I have not scored a single bump this year. Although I only fly two airlines (UA and CO) that apparently have their act together, a 17% increase in IDBs bemuses me. 

Which brings us to [the late economist Julian] Simon, who in 1977 on these pages proposed an auction system in which airlines would offer passengers on overbooked flights a gradually rising reward for giving up their seat. For example, if 115 passengers showed up for a flight with 100 seats, the airline would start to offer, say, a $300 voucher to passengers who agreed to take a later flight. If there weren’t enough takers at $300, the airline would increase the offer to $400, then $500, a free round trip ticket, etc., until 15 passengers volunteered. Auctions like this are highly efficient ways of allocating a scarce resource.

Yes! Yes! Yes! And you know what? If UA started the bidding at $100, I’d still take it under many circumstances.

Remember this incident, when I volunteered to give up my seat on a US Express flight that needed two volunteers, but because another volunteer could not be found, I had to take the flight and two people were bumped against their will? A $450 voucher was a great deal for me, but apparently not for anyone else on the 50-seat jet. But if a $600 or $800 voucher was being offered, I bet another volunteer would have been found. No IDBs, no cash out of pocket for US…

When economist Milton Friedman heard of Simon’s auction solution, he wrote that he was "utterly baffled" that "opportunities for large increments of profits are being rejected [by the airlines] for wholly irrational reasons." It is doubly baffling that 34 years later many airlines are still acting irrationally to the detriment of passengers and shareholders. Auctions make more sense than fines.

Well said. Airlines would be wise to re-evaluate their bump policies.

(I apologize that the WSJ article I linked to requires a subscription. The gist of the article is re-produced above.)

Get Daily Updates

Join our mailing list for a daily summary of posts! We never sell your info.

You have Successfully Subscribed!

Previous Article Airlines Work to Update Technology
Next Article Route through Chicago if you want a bump this summer?

About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

Related Posts

  • Ritz-carlton yacht collection ilma

    Questions (And Answers) About Ritz-Carlton Yachts “Struggles”

    July 6, 2025
  • Model Dumped Business Class Boyfriend

    Business Class Or Bust: Model Refuses To Fly Coach, Gets Dumped

    July 4, 2025
  • a blue passport on a black surface

    All The Patriotic Quotes In Your U.S. Passport

    July 4, 2025

1 Comment

  1. Consultant Ninja Reply
    June 8, 2010 at 5:12 am

    I wrote about this a while back, back when the economics was flipped. Then, it made more sense to do an IDB, pay the compensation, and take the cash from the walkup.

    http://www.consultantninja.com/2007/11/involuntary-denied-boarding-sucks.html

Leave a Reply

Cancel reply

Search

Hot Deals for July

Note: Please see my Advertiser Disclosure

Capital One Venture X Business Card
Earn 150,000 Miles Sign Up Bonus
Chase Sapphire Preferred® Card
Earn 100,000 Points
Capital One Venture X Rewards Credit Card
Capital One Venture X Rewards Credit Card
Earn 75,000 Miles!
Capital One Venture Rewards Credit Card
Capital One Venture Rewards Credit Card
Earn 75,000 Miles
Chase Ink Business Unlimited® Credit Card
Earn $750 Cash Back
The Business Platinum Card® from American Express
The Business Platinum Card® from American Express
Earn 120,000 Membership Reward® Points

Recent Posts

  • Delta Los Angeles Hong Kong
    Delta Air Lines Challenges United Airlines With New Los Angeles – Hong Kong Route July 12, 2025
  • a room with tables and chairs and a chandelier
    Review: Hôtel du Louvre (Hyatt Unbound Collection) July 12, 2025
  • Air India 787 crash report
    Air India 787 Crash Update: Preliminary Report Shows Fuel Switches Flipped Seconds After Takeoff July 12, 2025
  • Best Coffee Paris
    Great Coffee In Paris July 12, 2025

Categories

Popular Posts

  • Favorite Airline Commercials
    My 10 Favorite Airline Commercials June 15, 2025
  • a blue passport on a black surface
    All The Patriotic Quotes In Your U.S. Passport July 4, 2025
  • Qantas Lounge Review Hong Kong
    Review: Qantas Lounge Hong Kong (HKG) June 14, 2025
  • a row of seats in an airplane
    If You Abuse Company Travel Policy, Expect To Be Fired! June 16, 2025

Archives

July 2025
M T W T F S S
 123456
78910111213
14151617181920
21222324252627
28293031  
« Jun    

As seen on:

facebook twitter instagram rss
Privacy Policy © Live and Let's Fly All Rights Reserved. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Live and Let's Fly with appropriate and specific directions to the original content.