THE AIRLINE OVERSALES AUCTION PLAN - THE RESULTS

Among the passengers ready to board any flight, some will accept small inducements to wait for the next flight. These people can be identifi ed by an auction. In 1987 the US Civil Aeronautics Board mandated an a uction in cases of oversales, to reduce involuntary passenger removals . Airlines must ask for volunteers, using any incentive system they ch oose. Since the adoption of the system, oversales have increased but i nvoluntary removals have greatly decreased. The auction system has bee n a Pareto improvement, as predicted on the basis of theoretical and e mpirical evidence.