As Overbooking Wanes, Airlines Find More Savings

Typically, those expenses can include compensation to passengers, meals and lodging, travel on another carrier and increased work for airport agents.

Largely because of higher fees to change flights, not showing up "is not something people do anymore," Nason said in an interview. "People may get sick, or have a serious car problem and not get to the airport, but they don't just no-show as much."

Where American's failure-to-show rate was about 6% to 7% before the Sept. 11 attacks, it's between 2% and 3% today. With passengers far more likely to arrive for their flights, American and other carriers overbook far less than they once did.

Many passengers and travel advocates condemn overbooking, but in truth it provides one of the few ways airlines can protect themselves in cases where travelers fail to make their flights. The possibility of no-shows pushes carriers into risk-management mode as they seek to balance lost revenue from unsold seats against overbooking-related costs.

"Airlines are allowed to overbook because, when they compensate properly, especially if it is done with volunteers, people are happy," Nason says. "It is not a customer-service issue. It is an economic way to deal with the no-show uncertainty, as long as it doesn't get out of line."

In the vast majority of cases, problems are solved when volunteers accept compensation. However, in rare cases, passengers are bumped, in what is termed an "involuntary denied boarding."

Historically, American has had a relatively low rate of bumping fliers. In the first nine months of this year, for instance, it bumped 0.71 people per 10,000 passengers, the lowest among the legacy carriers and below the industry average of 1.11.