American’s New Denied Boarding Bidding System May Turn Out To Be A Bait And Switch

American has a new bidding system for customers to volunteer for denied boarding compensation. The goal is to hold down costs by getting customers to state up front how much they’ll accept for a bump, and the airline started holding people to their bid amounts rather than paying everyone the highest amount necessary to get enough volunteers.

This new process is called “Pay What You Bid.” And gate agents have the onus of being discrete so they don’t discuss what other passengers are getting, or announce amounts publicly when the need to solicit more volunteers. That’s not great for gate agents trying to get flights out. And once the flight takes off everyone getting a voucher will be standing there learning what everyone else got, turning a rewarding experience into a resentful customer interaction.

One problem with this system has been customers placing their bids without knowing how long it will be until the next flight they’re able to get on, so it’s not really possible for a customer to know in advance what amount they’d accept for inconvenience.

According to American Airlines expert JonNYC American is testing a new approach to showing customers flights when they’re volunteering, but there’s a pretty big catch.

The benefit to American of showing flight options to customers in advance is clear,

  • If you know what flight you’ll get after taking denied boarding compensation you’ll be more likely to volunteer (and more volunteers means lower payouts).

  • At the very least knowing what flights will be available means a more informed decision, so people who indicate willingness to volunteer are more likely to be firm volunteers when the time comes.

The problem is the flights customers are shown – and select – aren’t actually held for them (‘very subject to change’). American is unwilling to hold inventory for everyone who volunteers, since many volunteers that are solicited through this process won’t actually be used. But that means that between the time customers are shown flight options, and they’re actually used as a volunteer at the gate, availability for the flight they’re shown – and select – can disappear.

American discloses this. But there are going to be frustrated customers when this happen, who will quite reasonably assume that when they select a flight to take after agreeing to volunteer that they will be able to take that flight. They’ll wonder what the point of the exercise of choosing a flight was if it didn’t actually hold space on the flight?

I understand this is only being offered on a test basis for customers volunteering pretty close to departure so hopefully inventory will usually still be available!

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Well, if you don’t like the alternative flight option they’re giving you at the gate, you can so, “No, I thought I’d get their earlier, so I’ll only accept $XXX”, correct?

    Or you can refuse the offer altogether.

  2. @Daniel While that may be possible, your seat has already been given away. You want back on this flight? You get the middle seat in the back.

  3. @Daniel, lets say you are shown the available flights and have no problem with them, then an hour later or whenever they take care of you they hand you the voucher a new BPs for for your now 3 flight connection that requires an overnight. Seems the flights that they showed you when you agreed are no loinger available an dhad you known what youd be stuck with either you wouldnt have agreed to VDB or would have wanted alot more $$ to do so.

    Seems AA will simply say SOL, of cause if they protect the person on the new flight then and there that would solve things. But it seems new flights wont be confirmed till they take care of you

    But it makes sense for AA not to simply give everyone the exact same amount as what they had to give to the one who held out the longest. Never understood why they always did it that way. If I agreed to $400 it shouldnt matter that they had to pay the last person $1200. I asked for 4400 AA accepted tahts that

  4. @RF that is not true. Nothing is actually changed until you agree to the terms and actually agree to the alternative flight and compensation. The app is very clear that you are not making a change when they show you the compensation offers, rather, you will still have the option to decline with the gate agent before they take your seat assignment or boot you off your flight. I received the offer the day before my flight, chose the highest offer, but nothing ever came from it, and my seats remained the same.

  5. I always volunteer to get in on the action. Most of the time it doesnt work and i pass. On a recent flgiht, i told Delta I wanted the same offer as the last volunteer got. it worked out well. Everybody left happy.

  6. This sounds like an absolute nightmare. Makes me never want to volunteer in the app in advance again.

  7. Couldn’t AA solve this pretty easily? If the current flight is oversold by 5 people, and 20 people volunteer, just hold 5 seats on alternate flight and sort out who gets them later.

    Maybe reservation systems don’t work this way but it seems just setting n= # oversold rather than # volunteers is reasonable.

  8. @ Steve

    the actual reservations system…or any other microsystem/subsystem/addon can be customized to do exactly that… And that’s what American and others should be doing… Blocking seats on the next available flight(s). Not booking them, but blocking them until the gate agent finishes the process.

  9. @Steve 1 big problem is not everyone is going to the same place eg we are @ PHX with a flight to DFW,Im connecting to JFK, you to MIA, someone else is going TATL etc etc , so why if I can get onto a non-stop and you too should we have to go via DFW? only cause 5 seats were held since thats where the flight was going and has nothing to do with where the people are ending up, There might be flights say PHX-LAX-MIA that will get you into MIA hours ahead of taking another DFW flight

  10. @Gary, FYI, discrete /= discreet.

    Anyway, this sounds like a nightmare for passengers. Why would anyone want to volunteer if they get burned by this?

  11. This should work for many passengers as long as we can enter up to a five figure denied boarding compensation bid with an extra bonus for any overnight or three plus segment journey.

  12. I always thought that volunteering is completely nonbinding? Basically they will tell you which flight that you can get on at the gate and how much compensation you’re getting and if you don’t like it, you still can say no and get on the plane, even after volunteering in the app.

    Nothing is final until you say yes at the podium.

    Did that change?

  13. Passengers need a union. I stand ready to organize everyone on my flight who wants denied boarding compensation, and all of us will hold out for some maximal figure, say $600 cash (not a voucher) if they’re looking for a dozen people to toss. Then, we’ll draw straws or something for who actually gets the big checks. American, you asked for it….. a little solidarity by OUR SIDE, and we can actually get something worthwhile, and so much for the downsides here. (Note: the inevitable anti-union replies here will be cheerfully ignored.)

  14. Well the “phantom inventory” for lack of a better word could cut both ways. Either you’re shown a great connection so you bid low or you’re shown a bad connection so you bid high. In the first case, you get to the podium and are disappointed. Take it or leave it they say. You decline. In the second case, you’d never it make it up there since others outbid you. Either way, AA doesn’t care. They get their volunteers one way or another. Or IDB if needed.

    @Gary This isn’t grindr, it’s spelled discreet!

    @Steve That wouldn’t work. For one, if a flight is overBOOKed by 5, it’ll likely go out around even. It’s unlikely to be overSOLD. Airline seats are incredibly valuable in the days just prior to departure, after which point they are worthless (revenue management 101). Airlines are not going to block thousands of salable DoD inventory for potential bumpees. In fact, this is exactly why AA gets pissy if you try to hold seats for a couple of days/weeks and why they frown upon protecting passengers during IRROPs. If there’s a 10% change someone would’ve bought that $300 seat, AA has statistically lost 30 bucks thanks to your hold/bump/cxl/whatever. Airlines will occasionally offer advanced rebooking if flights are heavily overBOOKed but that does not tie up space; you’re deleted from AA1 and rebooked onto AA2.

  15. Whoa, you’re so wrong. If you volunteer to accept a $200 voucher at the gate, to accept a delay, here’s what you may get. A departure 36 hours later. I was NOT told that at the time I ve olunteered. They will eagerly take your seat forfeiture, and they wait to book your flight until after all your fellow passengers boarded. And then wow, suddenly, they discover there are NOT any flights left, out of that airport. You took the volunteer seat, so you’re screwed. I got majorly screwed by Delta on Dec.28. The costs to me far exceeded Delta’s $200 voucher to me. Never again, criminalDelta.

  16. This policy doesn’t sound like much of an improvement. Delta and United win hands down and the statistics show it.

    My partner and I were involuntarily denied boarding on American Eagle two weeks ago flying SBN-CLT right before, the app offered paultry amounts that maxed out at $450 with no custom field.

    The gate agents who said they primarily handled United Express Flights even said United policys are so much better than American’s, but didnt give us our rights immedatley and assumed we wanted $625 vouchers until I said “We demand cash.” We did get the $502 checks we were each entitled too in the mail. Another passenger was all set to accept the voucher until he heard me demand cash.

    At the gate they also made one single announcement “We are looking for volunteers to take a later flight.” with no mention of the money amount.

    Needless to say I’ve filed a DOT complaint against PSA airlines the operating carrier on our flight account of the gate agents not giving us our IDB rights immedatley. The whole situation was really poorly handled.

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