Have you ever arrived at the airport, looked for your flight on the overhead board and seen Canceled? Like me, do you assume the reason was a half empty plane? We were probably wrong.
It is actually about tradeoffs.
According the WSJ’s “The Middle Seat,” you might have been canceled because of a swap. If a plane loaded with business travelers had mechanical troubles and your flight was occupied primarily by low-fare leisure traffic, the airline will switch the business travelers to your plane. Not only are business refunds more expensive than the deals discretionary fliers get but the business traveler is more likely to cancel if she cannot get to her destination on time.
Because cost also determines whether or not your flight gets canceled, flights on larger planes are canceled less frequently. There is more food on widebodies that would be discarded (worth more than $12,000 on an international run), they have crews that would be paid unless they moved to another flight, and remaining stationary, planes require a parking fee.
Below you can see the cancellation cost difference between widebodies and small regional jets. Uncontrollable events are cheaper because there is less the airlines are required to give passengers in return for the cancellation.
Rebooking can be costly for the airline. The passengers that are moved to another flight take the seats of last minute fliers who would have paid the highest fares. The alternative of using another airline could be equally unattractive since they have to pay for that seat.
So here we have our three myths:
- Myth #1 Unfilled planes are the primary reason for a cancellation. (No, it relates to keeping the flights that generate the most revenue in the air.)
- Myth #2 Canceling saves money. (No, And, the higher the cost of canceling, the more likely the people on that flight will take off.)
- Myth #3 Rebooking is not a problem. (It is. The revenue sacrifice can be high.)
And here we have a recent history of cancellations:
Our Bottom Line: Tradeoffs
Thinking economically, flight cancellations are all about tradeoffs. Deciding which flights go and which stay, airlines have to consider crew, maintenance, catering, airport and handling fees, passenger accommodation obligations and passenger cancellation implications. Cost and benefit depend on the airplane size, the route, the passenger mix.
Even when the cause is uncontrollable, much more than the number of filled seats determines who gets canceled.