CAB ends domestic overbooking

Suspends airline privileges

May 22, 2012

The Civil Aeronautics Board (CAB) has issued an order Monday prohibiting airlines from overbooking flights anywhere in the Philippines.

In a statement, CAB Director Carmilo Arcilla said  they ordered domestic airlines to stop overbooking of flights, which often results in bumping off passengers and consequently raised the minimum penalties 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.

Under a 1972 rule, the compensation for denied boarding stands at P150 for domestic and P1,500 for international flights, plus 100 percent of the value of the first remaining flight coupon. 

Arcilla said they are major issue in the Philippines as they received numerous complaints for bumped passengers, particularly from low cost carrier Cebu Pacific.

The Board also suspended the application of the provision on overbooking contained in Section 3, Economic Regulation No. 7, as amended, 'Boarding Priority and Denied Boarding Compensation, except for some international flights.

“all tickets, regular or promo shall be rebookable and refundable. The general conditions of carriage shall be amended accordingly,” CAB executive director Carmelo Arcilla said in the order. 

Small print in airline tickets for domestic flights does not provide for rebooking or refund.

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

“all tickets, regular or promotional shall be revokable and refundable," the Board said.

The practice of overbooking is an international business strategy adopted mostly by transportation and communication companies.

This strategy allows telephone and internet operators, airlines, trains and cruise ships to ensure that all of its telephone/internet lines, seats or rooms will have maximum returns since all subscribers don't use the service simultaneously,  or in airlines, it reduces the chance for their plane to take off with empty seats.

Airlines usually oversold tickets in a flight based on previous years' passenger statistics of how many travelers have cancelled at the last minute for the route. 

In a disclosure by Cebu Pacific's Candice Iyog, she declared that a certain percentage of passengers are expected to be "no-shows" at some domestic points, particularly early morning flights, and none cancels to resort destinations like Caticlan during summer.

"In some other days, travelers change their travel plans but do not cancel their reservations". Iyog explained.  

Notorious for cancellations are businessmen who cancel travel at the last minute when their business meetings take more time than planned but they usually travel in full service carriers.