Mohamed A. El-Erian , Columnist

Delta and the Game Theory of Overbooking Flights

Passengers could be offered a goldmine for “voluntary denied boarding.”

April 17, 2017 at 6:00 AM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

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Given the deep mess that United Airlines created for itself after a passenger was dragged off a full flight last week, Delta said it could increase the incentives for “voluntary denied boarding.” Agents will now be allowed to offer up to $2,000 to entice passengers to give up their seats, significantly more than the previous limit of $800. If that doesn’t work, the agents’ supervisors can authorize payments of almost $10,000.

Delta’s aim is clear: Use the price incentive to deal with oversold flights and, thus, avoid the social-media-fueled anger that would be sure to erupt again should there be another messy involuntary “reaccommodation” (as United initially called the incident).