No-show as a business model

Simply explained: What does No-Show mean?

Tim Takeoff
28.09.2018
1 picture
4 minutes

No-shows are nothing if not expensive, and airlines will therefore go to great lengths to reduce the risks of such incidents.

If you simply overheard the phrase “no-show” somewhere, air travel would probably be the last thing you would associate with it. Airlines define “no-shows” as people who purchased tickets but who do not turn up for their flights. Around 3 million Lufthansa passengers alone fail to appear at check-in desks each year.

Overbooking as a strategy

Interestingly, the number of no-show passengers differs considerably from country to country. Japanese passengers rarely fail to turn up, whereas the phenomenon occurs more frequently in India. Airlines have therefore developed special prediction algorithms. Using parameters like rebooking statistics, weather data and cultural traits, they can calculate precisely which flights are particularly susceptible to no-shows – and then deliberately overbook them. If too many passengers actually turn up for these flights, airlines usually resolve the problem by offering them a variety of incentives, including upgrades to more expensive seating on the same flight. If this is not possible, passengers will be offered compensation including free overnight accommodation and rebooking on a later flight. In such cases, the airlines cover all the rebooked passengers’ expenses, including meals and transfers.

Earlier this year, an American Airlines passenger who refused to voluntarily leave an overbooked flight was forcibly removed from the plane, even sustaining minor injuries in the process. Fortunately, however, such unpleasant scenes are the exception.

Flexible versus fixed booking

If, however, your own plans change, it is often difficult to change your flight reservation. Very few people book flexible tickets. These tickets enable passengers to take any flight to their destination and, as the highest-priced fare class, are an incredibly expensive option. They do, however, allow customers to avoid the (sometimes considerable) financial losses involved in changing or rebooking their travel plans.

Business vs. leisure: the many reasons for no-shows

Why would someone book a flight and then simply not turn up for it? Well, there may be a variety of reasons. If, for example, their first flight is delayed, passengers can miss their connection. Even general everyday “obstacles”, like motorway traffic or a sudden illness in the family, can play a role. But these are by no means the only reasons.

Many passengers, particularly those flying short-haul routes, are business travellers. Companies often book tickets for their employees haphazardly, without taking costs into account. If a business meeting is rescheduled, employee tickets must be rebooked – a practice which results in large numbers of no-shows. If flexible tickets have been purchased, the seats in question usually remain empty. This is to the airline’s benefit as, if the plane is then overbooked, these seats can be reassigned. Ultimately, then, some of these seats are even sold twice.

No-shows as a business model

No-shows can also be a lucrative business model, particularly for today’s budget airlines. These carriers cash in on cases where customers want to rebook their tickets, rather than simply cancelling them. Unlike with premium airlines, it would be cheaper for such customers to buy new tickets for different flights, instead of paying the budget airlines’ expensive change fees.

What most people don’t realize is that while tickets for specific flights, especially cheap ones, are non-refundable, all European airlines are legally obliged by the European Flight Compensation Regulation to refund certain elements of the total ticket price in cases of advance cancellation. These include taxes, fees and passenger-specific charges, such as seat reservations and additional baggage fees. It may, therefore, be worth cancelling your ticket rather than simply not turning up. The airlines count on this being too much trouble for the customer and at least at first glance, not worth bothering with for such a cheap ticket.

Businesses provide assistance in dealing with airlines

Many airlines make cancelling a flight an incredibly involved process, meaning that people are reluctant even to embark upon it. In particular, airlines are experts at making the refund process as complicated and long-drawn-out as possible, a strategy which makes no-shows potentially lucrative.

To the delight of customers, however, a thriving market has grown up around potential no-shows. There are now start-ups – like, for example, the German company “Geld-fuer-Flug.de” – which purchase all types of airline tickets from customers. Passengers who do not wish to take their purchased flights, but who do not wish to go through the airline’s refund process either, can contact these companies. The companies then evaluate the tickets online and determine the proportion that can be refunded, taking into account a wide range of factors, including the tickets’ value, the amount of time remaining until departure, the services included with the tickets in question, and the airline involved. If everything is in order, they provide the ticket holders with an immediate payment, while retaining a commission amount for themselves. The passengers renounce all rights to their tickets, but receive a good proportion of their money back. The company then deals directly with the airlines and the passengers are absolved of the matter.

Customers can, of course, pursue the matter themselves, but most would prefer to pay someone else to handle this frustrating and time-consuming issue.

Image credits: Pixabay – Stocksnap

by Tim Takeoff

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