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Airlines turn to technology to solve overbooking puzzle

Stock MarketsFeb 13, 2018 10:50AM ET
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© Reuters. FILE PHOTO:A British Airways Boeing 747 passenger aircraft prepares to take off as passengers wait to board a flight in Cape Town International airport in Cape Town

By Sarah Young and Victoria Bryan

LONDON/BERLIN (Reuters) - Being offered cash at the gate to take a later flight because of overbooking may become a rarity if technology being examined by major airlines such as British Airways (L:ICAG), JetBlue (O:JBLU) and Qantas (AX:QAN) catches on.

The forceful removal of a passenger from an overbooked United Airlines flight last year sparked an online backlash last year and U.S. carriers pledged to revise their policies.

Many airlines still routinely overbook flights because a small number of passengers do not show up. If planes are overloaded, they seek volunteers to change flights before boarding, usually in exchange for cash.

A platform developed by Atlanta-based travel technology company Volantio will identify passengers most likely to be flexible about their flights and enable airlines to contact them in the days before they are due to depart.

The carrier can then offer an alternative seat plus incentives such as an upgrade or travel vouchers.

Volantio CEO Azim Barodawala said anyone who opts in to its system can be contacted. Machine learning algorithms will use data such as information available on the flight list to help determine which types of passengers might be ready to change.

"There are huge privacy concerns over who can be contacted. The partners with whom we've worked so far typically have a setting in their marketing permissions that permit us to reach out to them," he told Reuters.

Barodawala gave a hypothetical example that someone flying from Frankfurt to Paris and back in a day is likely to be on business and need to stick to those flight times.

The technology also means airlines can also potentially shift passengers from high demand flights and free up tickets for last-minute travelers prepared to pay a premium.

"It gives airlines the ability to generate some extra revenue while making two other parties better off - the flexible traveler and also the last-minute traveler who might not have been able to get a seat because the flight was sold out," Barodawala said.

It could also help airlines if they need to free up seats to rebook passengers following disruptions such as those related to bad weather.

Volantio said this week it had raised $2.6 million in a funding round, led by Ingleside Investors, representing the interests of the New York-based Israel family, but also involving BA-owner International Airlines Group, JetBlue, and Qantas.

IAG, whose stable of airlines also includes Vueling, Iberia and Aer Lingus, declined to say how much it would be putting into start-up Volantio. It has established a multimillion-pound fund to help to expand its digital abilities.

JetBlue invested through its Technology Ventures arm and Qantas through Qantas Ventures.

Airlines turn to technology to solve overbooking puzzle

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