Genting Dream passengers turned away: Why do cruises and airlines practise overbooking?

More than 100 passengers were unable to board the Genting Dream when it was overbooked on Sept 4, 2022. PHOTO: SHIN MIN DAILY NEWS

SINGAPORE - More than 100 passengers were unable to board a cruise ship at the Marina Bay Cruise Centre on Sept 4 due to overbooking of the cruise.

The ship, Genting Dream, can accommodate 3,352 passengers and a Resorts World Cruises spokesman said all affected guests will get a full refund and a complimentary cruise on Genting Dream for sailings before April 28, 2023, subject to cabin availability.

The Straits Times understands that overbooking, where more tickets are sold than seats available, is a common practice in the cruise and airline industries to account for passengers who do not show up.

Q: Why is overbooking practised?

A: In air travel, overbooking allows airlines to offer consumers cheaper fares and more choices, according to the International Air Transport Association's website.

It said that seats are a "time-sensitive and perishable product" as once a flight takes off, the seats on that flight are no longer available for sale.

Some passengers holding flexible tickets may not cancel their reservations when they are not able to travel, resulting in no-shows, it said. Other passengers may cancel their reservations too late for the airlines to resell the seats, it added.

The association said that by using revenue management systems, airlines can estimate the historical percentage of no-show passengers for any flight route.

"As a result, airlines can, with a degree of certainty, overbook a flight, considering the number of no-shows expected, thereby maximising the capacity," it said.

The Straits Times has reached out to cruise and airline operators to find out the extent or percentage of seats and cabins they allow to be overbooked.

Q: How does overbooking affect customers?

A: When airlines and cruises are overbooked, operators usually find out that the maximum capacity is exceeded only days or hours before boarding.

This means consumers know they have been bumped from their flights or cruises at only the last minute, often at check-in counters.

Malaysian Sophia Soo, 36, was one of those affected by the recent overbooking of Genting Dream. She was supposed to sail from Port Klang on Sept 5 with 48 other family members but received the cancellation only two days before departure.

The ship, Genting Dream, can accommodate 3,352 passengers. ST PHOTO: GIN TAY

She said it was puzzling why passengers were informed only two days before departure.

In 2017, a passenger was dragged off a United Airlines plane, allegedly due to overbooking, sparking outrage over the practice of overbooking and how the case was handled.

The airline later clarified that passengers had to be removed from the flight to accommodate staff.

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Q: What can be done if you are stuck because of overbooking?

A: There is currently no law in Singapore regulating the practice of overbooking and how affected consumers should be compensated, said the president of the Consumers Association of Singapore, Mr Melvin Yong, in a Facebook post on Sunday.

He added: "Consumers can rely only on conditions of carriage or insurance coverage which may not be entirely in their favour. The relevant authorities should consider regulating the practice of overbooking and how affected consumers should be compensated, as is the case in the United States and Europe."

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In the European Union, passengers denied a seat on overbooked flights travelling 1,500km or less are entitled to €250 (S$355) in compensation, said the EU website.

Those bumped off flights with distances of more than 1,500km within the EU and all other flights between 1,500km and 3,500km are entitled to €400, while those on flights travelling more than 3,500km are entitled to €600.

These rules apply to flights within the EU or those departing from the EU. They also apply to flights arriving in the EU from outside the region and are operated by an EU airline.

To qualify for compensation, affected passengers must not have received benefits for flight-related problems for the journey under the laws of a country outside of the EU.

Q: How do airlines handle overbooked flights?

A: According to the websites of several airlines, if a flight is overbooked, the airline will first ask passengers to voluntarily change flights.

For Singapore Airlines, it will first ask for volunteers willing to give up their reservations "in exchange for compensation agreed with the carrier".

In June this year, a tech columnist at American business magazine Inc. reported that after he boarded a Delta Air Lines flight with his family, the crew asked for eight volunteers to give up their seats on the oversold flight and offered them US$10,000 (S$14,000) in cash each. He and his family did not give up their seats.

When there are not enough volunteers willing to debark, some passengers would be denied boarding.

SIA said this is done in accordance with its boarding priority rules and takes into account passengers requiring special assistance and those with connecting flights.

Those denied boarding will be "entitled to compensation in accordance with applicable laws and regulations" or a compensation may be agreed upon, up to the fare paid.

Such compensation will be paid either in cash, miles or any other form agreed with the airline.

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