Some air travelers do not cancel their reservations when they change their travel plans, and others cancel so close to their flight’s departure time that we are unable to resell their seat. It’s important to remember that our product is perishable. Obviously, once a flight departs, our chance to sell a seat on it is gone forever. Unlike some businesses offering a perishable product — such as sporting events or concerts — we tend to be more flexible in accommodating change. And one byproduct of our flexibility is a high number of “no-shows” for just about every flight. If we were to limit the number of reservations we accepted to the number of seats on the plane, we would have to turn away lots of customers, and then watch our flights take off with lots of empty seats. That’s a bad outcome all around.
To keep that from happening, we have developed sophisticated forecasting techniques, based on data from millions of previous American Airlines and American Eagle flights. Over the years, we’ve found that the number of no-shows varies widely by market, month, day of the week, even by time of day. After analyzing the data, we accept only as many reservations as we believe are needed to match the number of passengers with the number of seats on each flight. Accepting more reservations than we have seats enables us to accommodate millions of passengers each year who would have otherwise been turned away.
We are usually able to predict the number of no-shows quite accurately. But occasionally, more customers show up than we expected. In these instances, we offer those travelers with flexible schedules the chance to give up their seats to make room for those who feel they must travel on that particular flight. Volunteers typically receive a confirmed seat on a later flight and a voucher good toward future travel on American Airlines.
We have also implemented a cancellation policy for nonrefundable tickets that benefits both our customers and the airline. If customers cancel their reservation prior to their scheduled flight departure, they are eligible to apply the value of their ticket toward the purchase of another fare on American, less any applicable change fee. This policy has helped to reduce the number of no-shows and the number of oversold flights.
Though the system isn’t perfect, it is actually quite rare that we are forced to deny boarding to a passenger holding a reservation. In fact, fewer than one out of every 19,000 American Airlines/American Eagle passengers is involuntarily denied boarding. While even one is more than we’d like, we are proud to be among the industry’s leaders in this area.
Selling our product as efficiently as possible is important to us, and important to our customers. We don’t always thread the needle perfectly, but thanks to our skilled employees and long history, we usually come pretty darn close. On behalf of our entire team, I want to thank you for flying with us today.
GERARD J. ARPEY
Chairman & CEO