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Airlines, Industry, Nadine Gutierrez

Airlines allowed overbooking practice, under regulation


The DOTC-DTI-CAB has drafted Administrative Order No. 01, which sets guidelines regarding various airline obligations such as overbooking. It is set to be submitted for public consultation starting July 6.

The bill addresses issues such as overbooking, ticket refunds, cancelled and delayed flights, lost baggage and misleading advertisements.

Mainly, the bill allows airlines to continue practices such as overbooking, under the provision that it does not discriminate in choosing who to bump off, but instead asks for volunteers to give up seats to accommodate overbooked passengers.

The airlines must offer compensation in the form of amenities and priority booking in the next available flight and/or cash incentives to those who volunteer to give up their seats.

The bill directly scraps Resolution 28 which was supposed to take effect last June 15.

Resolution 28

In June, the Civil Aeronautics Board (CAB) announced a ban on overbooking flights by local airlines through Resolution 28. This was in order to address one of the top passenger complaints regarding the airline practice of overbooking, where domestic carriers sell more tickets or commit more seats than are available.

Along with the ban, domestic carriers are to be fined Php 5,000 for each person bumped off a flight along with a ticket refund.

The ban was met with protest from low-cost carriers, who pointed out that the ban would damage the business model. Budget carriers such as Cebu Pacific argued that the ban would result in as much as a 10% increase in fares, as the practice of overbooking actually enables airlines to spread the cost across more seats resulting in lower fares. They also pointed out that the ban may affect tourism in the country.

Overbooking is practiced by carriers as a hedge against passenger “no-shows” and last minute cancelations, and as a solution to seat perishability with every unoccupied seat per flight thus maximizing the return of investments.

At present, airlines are allowed to overbook as much as 10% of seats in a flight.

The local aviation sector

No-frills service and cheap fares offered by low-cost carriers have been a major factor in the growth of Philippine airline traffic, seeing a rise in recent years, with a 12% increase to 34.5 million passengers last year.

The government said that Administrative Order No.01, along with other government issued regulations involving the local aviation sector such as the “pocket open skies policy”, is part of a grand plan to make the Philippines more attractive to tourists, stimulating economic activity in the country.

However, domestic carriers have seen such regulations as unfavorable, warning that they will make them less competitive and thus affect travel in the country.  Nadine Gutierrez

As reported by: Rappler.com, Manilatimes.net

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About aitsalimbay

The official newsletter of the UP Asian Institute of Tourism.

Discussion

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