LCQ7: Airline overbooking

     Following is a question by the Hon Cheng Chung-tai and a written reply by the Secretary for Transport and Housing, Mr Frank Chan Fan, in the Legislative Council today (November 15):
     Currently, airlines usually estimate the no-show rate of passengers and exercise discretion to oversell air tickets. When airlines fail to provide services for their passengers due to overselling air tickets, it is only left to both parties to negotiate, in accordance with the conditions set unilaterally by the airlines in the air tickets, and agree on the follow-up arrangements (such as arranging the passengers to take another flight or offering them compensation). In this connection, will the Government inform this Council whether it will consider requiring airlines to release on a regular basis the position of their overselling air tickets for reference by members of the public when buying air tickets?

     Similar to other commercial organisations in the service industry, airlines will set out the sales conditions in relation to the provision of services as the basis of protecting the interests of both sellers and buyers. Relevant sales conditions are set out in the Conditions of Carriage. With reference to the Recommended Practice 1724 of the International Air Transport Association concerning general conditions of carriage, these conditions include fares, taxes, fees and charges, details concerning refusal of and limitation on carriage, schedules, arrangement for cancellation of flights as well as details for refunds. Upon the purchase of an air ticket by the customer, these conditions will form part of the commercial contract between the airline and the customer. The details of the contract must comply with relevant legislations. Customer should check with the airline concerned or travel agents on the meaning and applicability of these conditions when purchasing an air ticket.
     Irrespective of the reasons, should an airline fail to provide services after the air ticket is sold, the airline concerned must make necessary arrangement in accordance with the Conditions of Carriage or performance pledge (e.g. arrange for another flight for its passengers or provide refunds), so as to minimise the inconvenience caused. Issues concerning compensations (if applicable) should be negotiated and resolved by the parties in accordance with the Conditions of Carriage. Should the parties fail to reach a consensus, the passenger concerned could seek legal recourse for consumer protection. 

     Given the time-sensitivity of sales of seats, high operating costs and a host of factors affecting airlines' operations that are beyond their control, the overbooking arrangement has been airlines' decade-long practice. Such an arrangement aims to enhance flexibility in maximising the use of resources and ensure efficiency of every single flight. It is the airline's own commercial decision in considering whether it would allow overbooking (and to bear the risks of protecting passengers in case of overbooking) as well as the overbooking ratio.  

     As regards the suggested regular disclosure of the overbooking situation by airlines on a regular basis, as seats availability is subject to change any time, despite airlines' best efforts to ensure accuracy of such information, the publication of such figures may not effectively assist passengers in making decisions nor ensure that the passengers would not eventually be affected by overbooking. For instance, an airline may switch to other aircraft types in response to sales and/or other conditions, and such possibilities may not be reflected fully in the airline's regular announcement of overbooking situation. Regardless of whether overbooking is practised, in case an airline fails to provide services after the air ticket is sold, it has to make suitable arrangements in accordance with the Conditions of Carriage or performance pledge. Besides, there is an established and effective mechanism in handling consumers' complaints. We are of the view that the aforesaid existing mechanism already provides reasonable protection to passengers.

Ends/Wednesday, November 15, 2017
Issued at HKT 14:30