Airlines told: allow refund, rebooking; don’t overbook flights

MANILA, Philippines – As response to the growing number of passenger complaints on airline services, the Civil Aeronautics Board (CAB) issued an order temporarily suspending a contentious provision in airline tickets for domestic flights that does not provide for rebooking or refund.

In an order dated May 4 and released on Monday, May 21, the CAB suspended the ability of the local airlines to decline rebooking or refund from passengers that request it, especially when their flights are delayed or cancelled.

The order also required the airlines to stop overbooking flights, which often results in bumping off passengers. 

“In view of the numerous complaints against Philippine carriers…the non-rebookability and/or non-refundability as a condition attached to any ticket is suspended until final action on the matter by the Board,” the CAB ordered.

“Consequently, all tickets, regular or promotional shall be revokable and refundable,” it added.

This CAB order came amid efforts that started in 2011 to update and modernize passenger-protection guidelines that promise better service to travelers.

The House of Representatives is currently investigating alleged “unjust” and “unfair” policies of the budget carriers, including nonrefundable, nonreroutable and non-endorsable tickets, which, if unused, are forfeited.

Overbooked flights

The CAB also suspended the current industry practice of overbooking of domestic flights and raised the minimum fees paid by airlines when they bump off passengers.

From P150 per passenger bumped off or denied booking, CAB now imposes a P5,000 minimum fee per passenger against each erring airline.  

“The Board resolves…to suspend effective immediately the application of the provision on overbooking contained in Section 3, Economic Regulation No. 7, as amended, ‘Boarding Priority and Denied Boarding Compensation’,” stressed the Order.

“There is a need, in the interest of public service and convenience, to address problems on denied boarding resulting from overbooked flights,” it added.

Earlier, airlines had expressed that overbooking is a standard worldwide airline practice.

Candice Iyog, the head of marketing and distribution for domestic passenger industry leader and budget carrier Cebu Pacific, had said that “there is a need to strike a balance between consumer welfare and industry growth.”

Cebu Pacific and Philippine Airlines, the country’s biggest, had contested these CAB proposals before.

Why are flights overbooked?

The practice of selling more tickets than available seats in a flight is an intentional business strategy among transportation and communication companies.

This strategy allows airlines, trains and cruise ships to ensure that all of its seats will result in a maximum return on investment since it reduces the chance that a plane takes off with empty seats.

The number of oversold tickets in a flight is based on previous years’ passenger statistics of how many travelers have cancelled at the last minute for the route. A certain percentage of passengers are expected to be “no-shows” since they change their travel plans but do not cancel their reservations. Usually, businessmen cancel at the last minute when their meetings take more time than planned.

More often than not, airlines still make more money, even if they have to compensate bumped off passengers with cash or free tickets, than if they sell tickets only based on the plane’s capacity.

However, several Filipino airline passengers who have been bumped off take to social media, like Facebook or Twitter, to vent the inconvenience they experienced.

Some lawmakers have taken to holding congressional hearings, which resulted in the current effort of CAB to review passenger-protection guidelines. – Rappler.com