Why do airlines overbook flights?

An empty seat on a departing flight is revenue lost forever. Airlines know from experience that, on every route, a percentage of passengers with a reservation don't board: they change plans, miss a connection, fall ill, or, in the case of business travelers with flexible tickets, simply take another flight. That percentage is fairly stable and predictable, on the order of 5% to 15% depending on the market, and airlines model it with years of historical data by route, day of the week, time and fare type.

Revenue management systems set an authorization level above the aircraft's actual capacity. If a 180-seat flight historically shows an 8% no-show rate, the airline can accept around 190 bookings. The calculation compares the cost of an empty seat with that of a denied passenger, which includes financial compensation, rebooking, accommodation and reputational damage. If the calculation is right, almost no one is left behind; when more travelers show up than expected, the airline first looks for volunteers in exchange for money or vouchers, and only denies boarding as a last resort.

In the European Union, Regulation 261/2004 requires compensating passengers denied boarding against their will with 250, 400 or 600 euros depending on flight distance, in addition to offering alternative transport or a refund and assistance. In the United States, the Department of Transportation sets compensation proportional to the ticket price, with caps revised periodically. These rules turn overbooking into a quantifiable risk that airlines accept because, overall, it's cheaper than flying with empty seats.