>as long as standby flights are cheap enough, people will accept
If you're open to using financial incentives like cheaper pre-arranged "standby" flights, why is that better than auctioning cash/vouchers to willing passengers volunteering to be bumped?
The problem with your proposal is that all the passengers are forever sorted into "guaranteed" and "standby" according to first-come-first-served:
|timeline of bookings -->-->
|-- guaranteed --|--- standby --|
However, order-by-reservation-timing does not reflect the true priorities of the passengers on the day of the flight. Many of (possibly most) of the passengers that bought the earlier "guaranteed seats" happen to be the ones most willing to accept financial compensation for bumping.
In terms of game theory and fairness, calculated overbooking based on stable historical trends seems to be the most optimal strategy that benefits the most people. The real issue is that the airlines implement the compensation incorrectly. Instead of blaming the overbooking, blame the airlines' compensation rules:
1) offer cash instead of vouchers
2) eliminate silly rules about caps
3) start the auction process as early as possible in the lounge area instead of waiting until the last minute by standing in the aisle of the plane with a bunch of impatient passengers. (With American Airlines, their check-in kiosks will sometimes alert passengers and give them the option of being voluntarily bumped.)
If you're open to using financial incentives like cheaper pre-arranged "standby" flights, why is that better than auctioning cash/vouchers to willing passengers volunteering to be bumped?
The problem with your proposal is that all the passengers are forever sorted into "guaranteed" and "standby" according to first-come-first-served:
However, order-by-reservation-timing does not reflect the true priorities of the passengers on the day of the flight. Many of (possibly most) of the passengers that bought the earlier "guaranteed seats" happen to be the ones most willing to accept financial compensation for bumping.In terms of game theory and fairness, calculated overbooking based on stable historical trends seems to be the most optimal strategy that benefits the most people. The real issue is that the airlines implement the compensation incorrectly. Instead of blaming the overbooking, blame the airlines' compensation rules:
1) offer cash instead of vouchers
2) eliminate silly rules about caps
3) start the auction process as early as possible in the lounge area instead of waiting until the last minute by standing in the aisle of the plane with a bunch of impatient passengers. (With American Airlines, their check-in kiosks will sometimes alert passengers and give them the option of being voluntarily bumped.)