Bidding to get bumped?

Overbooked flight. Been on one of those lately? Yeah, thought so. During July – September of 2010 alone, 183,469 passengers were “bumped” off their ticketed flight. That’s up nearly 3% from the same period a year earlier, according to the Department of Transportation.

Airlines have mastered the new business formula: fewer flights and more passengers. That means a big headache for passengers hoping to get where they are going. Well, grab the Advil because it may be getting worse.

Delta is launching a new system that asks you to set the price you’d accept to give up your airline seat. Marginal Revolution has the scoop. It looks like during check-in at one of its kiosks a screen pops up and asks you to just punch in a dollar figure.

It’s a genius move for Delta which won’t have to guess at how much (or how little) of a voucher passengers will take. But the catch is, you’re doing Delta’s dirty work. The airline hopes you will underbid other passengers, and ultimately, it hopes it will have to pay out less than perhaps it normally would have. In fact, the check-in screen even reads: “Tip: Delta accepts lower bids first”.

It’s still to be seen if Delta's new system has a maximum or minimum voucher price. So what's a good bid? Unfortunately, the Department of Transportation doesn’t keep statistics about average airline voucher values. But I think $300-$400, is a fair price for getting bumped on an average domestic flight. Remember: don't just think about how much you paid. The airline should compensate you for the inconvenience as well.

I should note I’m a frequent flier card-carrying member of Delta and for the most part, a big fan. Ultimately, however, I worry this is another lose-lose situation for passengers. Delta holds all the cards on this one. Delta overbooks your flight and fliers receive a smaller voucher to get bumped.

First bag flies free with Delta credit card

Perhaps finally some good news for airline passengers! The Associated Press reporting Delta will waive the first checked bag fee for those using its American Express credit card.

Starting June 1, Delta said it will waive the $25 each-way fee for up to nine people on the same reservation.

Delta collected $215 million from baggage fees alone in the first quarter. American Express spokeswoman Mona Hamouly declined to say whether the company is paying Delta to give up the first-bag fee for people who carry its card.

Michael P. Taiano, a credit card industry analyst at Sandler O'Neill & Partners, said a credit card company would probably have to pay for something like waiving the first-bag fee. "Clearly it's potentially a win for AmEx — you get more volume, and high-end volume at that," he said. And for Delta customers, the change would save $200 in bag fees for a family of four traveling round trip."A $200 swing is enough to get somebody to book their flight on Delta versus another carrier," Taiano said.

So would the savings be worth it to you to get a Delta credit card? And will other airlines feel the pressure to follow suit?