SpiceJet Flights Overbooked? How Overbooking Symbolises A Dark Side Of The Aviation Industry Paving Inconvenience To Passengers!

Imagine paying for your tickets, getting up in the dark of the morning, reaching the airport for boarding on an early morning flight, and then suddenly being bumped off from your own flight! Isn’t that highly disturbing? Recently, an individual on LinkedIn vented out on Spicejet about overbooking flights, which led the passenger to be bumped off from his own flight!

Manish Jagdish Taneja, one of the passengers, shared his experience on LinkedIn and complained about the carrier’s lack of operational efficiency. Taneja stated that he was scheduled to board SpiceJet Mumbai-Delhi aircraft SG8252 at 6:30 a.m.; however, the airline overbooked the flight without prior notice. When Taneja arrived at the Mumbai airport check-in counter, he was denied boarding since his seat had already been assigned to another passenger. When Taneja inquired about the next available flight, the airline gave him and several other passengers the option of flying on the 10 p.m. flight on the same day. 

Taneja and six other passengers complained that the airline failed to communicate the aircraft’s overbooking to them via SMS or email. After around 40 minutes, the airline crew tried to accommodate the passengers on the same flight by printing them boarding tickets without any seat allocations. 

The passengers were then led to the security gate by ground staff, where they were requested to wait for a while before being told to depart because the boarding gate had closed. After the customers demanded a refund because they did not want to take a flight at 10 p.m., the airline staff had them wait for a time before telling them that they would be handed double the amount of the base fee as a ‘token of apology’ and that their tickets had been revoked.

The service also stated that “communication regarding this will be received within one hour, and the refund will reflect in the bank within seven days.” Taneja discovered, however, that the exit gate register contained a record of ‘No Show’ for the passengers and demanded that the record be changed to ‘Seat Denied’. 

What is overbooking, and why is it problematic?

Overbooking is a frequent practice in the travel business, particularly among airlines, which sell more seats than they have available on a flight. This is done to increase revenue and keep flights as packed as possible. However, overbooking may be problematic for customers and airlines, resulting in frustration, discomfort, and even financial losses.

Airlines benefit from selling more seats than they have available because it allows them to account for no-shows, cancellations, and other factors that could leave seats unfilled. This is especially essential for airlines with tight profit margins, as each empty seat represents a lost opportunity to make money.

However, overbooking can be problematic for airlines. When aircraft are overbooked, some people may be left without a seat on the plane. This might cause annoyance and fury, especially if travellers have already purchased their tickets and made other travel plans. Overbooking can sometimes result in legal action or unfavourable publicity for airlines.

Overbooking may be highly inconvenient for passengers. When planes are overbooked, customers may be booted from their seats or forced to catch a later flight. This might result in missing connections, lost luggage, and other complications that can jeopardise trip plans. In some situations, passengers may be entitled to compensation for their inconvenience, but this can be difficult to secure.

So, though the practice of overbooking, which involves 50-50 relationships with airlines to maximise revenue and incur losses, is still legal, and a large part of the airline industry indulges in this practice.

Airlines are legally allowed to overbook flights. On the other hand, passengers have the right to be informed of denied boarding, which occurs when an airline refuses to carry a customer who is on time for boarding. However, if the airline has reasonable grounds, such as health, safety, security, or insufficient travel papers, it may prohibit boarding. So, in this case, though SpiceJet has done something illegal by overbooking its flights, it should be charged for not informing the customer before so that inconvenience at the customer’s end would have been avoided.

But this is not the first time SpiceJet has encountered such a problem that has caused customer anger. Many users on LinkedIn voiced similar concerns about SpiceJet and other airlines that have denied passengers boarding due to overbooking of flights.

The data hint at SpiceJet’s overbooking and how it accounted for revenue loss for the airline and convenience loss for passengers.

According to data from the DGCA, SpiceJet incorrectly denied boarding to 3,377 passengers between 2022 and January 2023, the highest rate among all Indian carriers. During the same time period, the airline paid compensation to affected passengers totalling Rs 64.66 lakh. In comparison, Air India and GoFirst, transporting a comparable number of passengers as SpiceJet, denied boarding to 2,449 and 118 individuals, respectively. SpiceJet managed 10.671 million passengers in 2022, Air India 10.774 million, and GoFirst 10.902 million.

Market experts believe SpiceJet denied many boardings because the airline overbooked several flights or cancelled and combined flights, resulting in overbooking. Similarly, according to DGCA data, SpiceJet’s flight cancellations affected 52,223 passengers in the same period (from January 2022 to January 2023- 13 months), with the airline compensating passengers for Rs. 1.55 crore during the same period. In comparison, Air India and GoFirst’s flight cancellations irked 24,002 and 4,425 people, respectively, over the same 13 months.

Can a problem with refunds also be seen in the case of SpiceJet, which also draws criticism from many?

A SpiceJet spokesperson told a newspaper last February that it credits reimbursements immediately and within a maximum of seven days, but customers and travel brokers disagree.

According to other Delhi-based travel brokers contacted by the same news site, SpiceJet often takes 2-3 weeks to provide ticket refunds after promising them. Most airlines issue refunds within ten days of accepting tickets, while SpiceJet typically takes a few weeks,” claimed an executive with Delhi-based Welgrow Travels. He also stated that refunds for large-ticket bookings, particularly on SpiceJet, usually take longer.

A SpiceJet senior executive, speaking anonymously, stated that refunds for tickets greater than 50 seats take approximately two weeks to process since the airline must file tax rebates for the cancelled bookings. He noted that while there is no cash flow issue in refunding, processing time may vary depending on the individual cases.

An industry insider stated the same sentiment, stating that because SpiceJet has little manpower in its accounts division and is not actively hiring to replace employees laid off due to the COVID-19 outbreak, refunds are processed by a more minor team at SpiceJet.

According to an official from online travel site Yatra.com, SpiceJet typically takes 10 days to process refunds. He stated that the time it takes is due to bank processing rather than SpiceJet’s approval to grant refunds to clients. 

Financial doldrums at Spicejet: one probable cause of overbooking? However, improved finances can also be seen!

2022– The DGCA further stated that the airline has been in financial difficulties, as a check conducted in September 2021 discovered that SpiceJet has been skipping payments to vendors. In 2022, SpiceJet operated all of its domestic flights in India on a cash-and-carry basis. SpiceJet has been battling cash flow challenges since the pandemic’s breakout and has received Rs 1,350 crore from the government’s Emergency Credit Line Guarantee Scheme. 

Also, in July 2022, the regulator ordered SpiceJet to reduce the total number of flights by 50% for eight weeks following multiple safety incidents with the airline. During this time, the airline was subject to “Enhanced surveillance”. The primary goal of enhanced surveillance was to ensure that financial difficulties had no negative influence on aircraft operations. According to regulatory officials, enhanced surveillance includes nighttime surveillance and spot checks.

2023– A year after July 2023, SpiceJet was removed from the DGCA’s ‘enhanced surveillance regime,’ following an inspection of 23 aircraft and 95 observations. Also, SpiceJet revealed its interest in acquiring Go First in December 2023 and plans to make a bid after completing extensive due diligence on the financially ailing company.

2024—Investor confidence seemed to gain speed as funds were infused into SpiceJet this year. In February, SpiceJet received an extra Rs 316 crore in investments, bringing its total cash generated to Rs 1,060 crore through a preferential offer. This is part of SpiceJet’s revival strategy. Earlier this year, it acquired Rs 744 crore in capital injection, with other subscriptions still pending regulatory approval.

The bottom line.

The “no-show” hedge Overbooking, or selling more seats than are available, is a global phenomenon common in industries with “perishable seats,” such as hotels, taxi companies, and, of course, flights. Furthermore, airline seats are a perishable commodity. Overbooking is an industry-wide strategy for seat optimization, anticipating last-minute cancellations by confirmed customers.

Now, if your airline overbooked and you were denied boarding, here’s the bad news: you can’t sue the airline because the rulebook allows such conduct. But, as a consolation, you are entitled to compensation. “In circumstances of denied boarding, airlines are required under DGCA regulations to give compensation. This includes alternate arrangements, refunds of fares, and/or monetary compensation for the inconvenience.” 

However, in the case of SpiceJet, there may not be a refund issue, as it usually handles refunds to passengers and travel brokers. Still, it does have a customer service issue. So it is better for the airlines to resolve this customer handling issue and inform the passenger earlier about the denial of boarding so that the passenger may have less inconvenience, or the airline is going to lose a chunk of its customers as in this case that Mr Taneja mentioned clearly that he is not going to board SpiceJet again.