Phx, this is an outdated argument. In the past, you could argue that when tickets were more flexible, there was a case for over-selling, as the deal was flexible both ways. The passenger could no show, but the ticket retained it's value and the customer could use it on another flight. Now, the vast majority of tickets sold are non refundable and "no showing" for a flight results in a cancellation of the ticket.
How is the airline disadvantaged by flying with empty seats? The airline has sold those seats. They have the revenue, if the passenger "no shows" they still get the money.
I have a compromise suggestion. Let's assume that 20% of passengers travelling on a flexible ticket "no show". I suggest we have a regulation that airlines can only oversell seats by 20% of the passengers on that flight who are travelling on a fully refundable ticket.
So, on a 100 seat aircraft, lets say that 10 seats are booked using fully refundable tickets. The airline could oversell by 2 seats.
Btw.. there are airlines in the world which never oversell. Some of them are highly profitable... the ability to oversell seats and profitability are not linked.
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