Business News

CCTV Script 12/04/17


This is the script of CNBC's news report for China's CCTV on April 12, Wednesday.

It all started with a crowded flight in Chicago, but the ensuing controversy may have many asking why airlines overbook their flights, risking the ire of their customers.

Overbooking flights is fairly standard in the airline industry and completely legal.

And there are good reasons for the industry practice, according to analysts.

Airlines often engage in this practice to make up for customers who do not show up for their scheduled flight, trying to ensure that their flights are as close to full capacity as possible.

In 2015, 46,000 travelers were involuntarily bumped from flights, according to data from the Department of Transportation.

[John Bailey, Partner, MD, Ketchum Singapore] "The overbooking is standard practice. Most times, airlines manage their loads very skillfully. Of course, United said they are gonna review that, but in terms of changing through actually communication environment, yes they are changing, but just not quickly enough."

Airlines had struggled for three decades as increased competition and deregulation weakened airline fares.

Airlines simply do not want to spend money on new equipment to then only have flights that are half full. The companies would rather wait to add to their fleets until they are sure that there is enough demand to fill the seats.

As a result, the percentage of seats filled - or the load factor - for domestic flights has remained fairly flat at 85 percent in recent years. This means that most planes within the U.S. fly close to their full capacity.

The most recent Airline Quality Rating report, which tracks on-time performance, rate of involuntary denied boardings, rate of mishandled bags and the rate of customer complaints. Alaska airline, Delta and Virgin America are the top 3 airlines in the ranking.

Hawaiian Airlines had the best on-time performance (91.1 percent) for 2016.

Hawaiian and Delta were the industry leaders in avoiding involuntary denied boarding incidents, while Virgin America had the best baggage handling rate.

On consumer complaint rate, Southwest Airline had the lowest rate of all.

CNBC's Qian Chen, reporting from Singapore.