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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • On Tonight's Plane, The Last Plane 42 comments
    Dec 18, 2012 10:41 PM


    It has been almost a week living in the UK. I wake up at the Connaught, my favorite hotel in London. As the sun rises over the roofs in Mayfair, I decide that today is the day to fly back home to the States. The hotel makes everything feel comfortable, so we quickly slid into a routine of where to eat and what to do and toward the end we started planning for the next trip. Within a few days, they make it feel like home, but at some point we have to get back to other things… even when we are not paying for any of this.

    It started almost by accident when we were teenagers. We would travel whenever we could and our schedules were loose enough that we would always take whatever compensation that we could negotiate to voluntarily bump from flights. It started small. We would spend an extra day in the Caribbean here, in Paris there, and mostly accept whatever we were offered. Typically it amounted to little more than room and board. But we had a sense that we had stumbled onto something, that there was more to this.

    Soon, we became part-time professional bumpees. We would plot ahead, using a combination of airline strike schedules and seating charts to determine the most constrained seating supply relative to business travelers with refundable tickets. Such tickets are overbooked in proportion to the airline's assessment of their probability that they will not check in. However, during strikes, non-striking airlines do not typically account for the spike in demand as travelers shift to the remaining planes.

    Early on, we would need to show up at the airport, but after a while, they would take our offer to take a bump over the phone. We had pre-established where we wanted to stay, to eat, and how much we would need in vouchers for future flights in addition to new tickets. Due to work schedules, we were unable to keep this going full time, but it works out to approximately $511,000 per year in vouchers for a bumpee couple. Eventually, we gave away tickets as gifts because we had traveled enough on a given airlines.

    Relais Christine is our spot to stay in Paris over the week of Thanksgiving. We spent a couple of Thanksgivings in Paris in a row, but were still stuffed with too many Air France vouchers for the number of vacation days we could take. We would always pick up Air France vouchers, but ended up just giving them away to family. We love travel, but we mostly loved the chase. We never knew how many days we would be gone and at the end, would spend our trip home scheming up ways to use our pile of vouchers.

    With work and kids, things change. Now, we don't always have the next day free and, happily, the opportunity cost grows with time. But there are also tweaks that have added to our, now rarer, flights as mostly ex-bumpee pros. Here are two: first, US Airways' frequent flyer program occasionally offers a match on miles purchased and then subsequently on miles transferred. We take all that you can get. Net of these two matches, we're next flying to Australia via Singapore for a little over $1,000 each.

    The second tweak is one of the Japanese airlines has a frequent flyer program that allows its members to tap directly into their website's master chart of flights and seats for all of their partner airlines. This is the key information that we need to plan without fail for securing bumps. At 35,000, my 3-year old son sat behind a few chocolate chip cookies and a glass of milk that they served in a martini glass. "Daddy, do all airplanes have bars?" I had never seen or heard of such a thing at his age. "Well," I said, "apparently all the ones you fly on do".

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital, a partnership that invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our partners, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

    Themes: voluntary bump
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  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » With a large number of BA planes grounded ( http://read.bi/WJQqvX ), seats on Airbus planes with schedules similar to those relying on 787s will offer great bump potential. I have invested in a number that should hopefully pay off.
    16 Jan 2013, 08:56 PM Reply Like
  • mrholty
    , contributor
    Comments (816) | Send Message
     
    Chris, how are you pulling this off without being at the airport? Having used to work fora an airline I've seen people pull this off at certain times.
    16 Jan 2013, 09:12 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Thanks for the question.

     

    I buy refundable tickets and then call in on the day of the flights. It is especially easy if you have good frequent flyer status and can use the phone numbers associated with those lines. Using a strategy described elsewhere ( http://seekingalpha.co... ), I’ve used airline credit cards to get frequent flyer status on a number of airlines. In my experience, the people who manage the frequent flyer programs are somewhat more flexible and more knowledgeable about rearranging flights and compensating flyers for taking voluntary bumps. Tomorrow will probably be a good day for this strategy, but we’ll see.
    16 Jan 2013, 09:37 PM Reply Like
  • merger arb trader
    , contributor
    Comments (3) | Send Message
     
    Very interesting and creative Chris. Thanks for sharing. I'm not sure I understand it all. Here's what I think I understand: You buy a refundable ticket on a flight you think has a good chance of being overbooked. You select the flight based on things like
    1)an airline is striking, so those routes may crowd another airline that flies to the same destinations
    2)Busy times of the year like spring break or the summer or Holidays
    3)Likelihood for bad weather
    4)Looking at seating charts to see which flights are almost full so you buy the ticket on a full flight. Can we see the seating charts on flights before buying a ticket?
    Then the day of the flight you call the airline and ask if the flight is overbooked? If no you cancel the flight? If yes you offer to take the bump? In the case you take the bump what happens? They send you a free R/T ticket? They don't try to reschedule your flight?
    You had mentioned this weekend you bought some tickets. I would love to know your thought process as to which flights you purchased and the reasons why. And if it worked.
    You can see I don't fully get it but always love to learn as it keeps our brain working and our spirit alive and growing. Any corrections to my understanding would be appreciated/
    Hope you have a great weekend regardless if you get bumped many times or not at all
    19 Jan 2013, 09:15 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » You’re welcome. Yes, we buy refundable tickets on flights that we think will be overbooked. Your description of what you understand is spot on. When we take bumps, we can free refundable tickets and typically a voucher for food and a hotel as well as money in cash or a travel voucher for a given amount of cash (the voucher is typically a better deal). We have received vouchers in varying amounts, typically from $500 to $1,000 per person.

     

    Oh, one other travel idea that might be worth trying: United appears to have a very formulaic, possibly computer-generated form response to complaints which comes with 1.) an apology and 2.) a $500 voucher. So, after a short flight on United, I sent a (much deserved) complaint, which generated the $500 voucher. The return trip deserved another complaint, as it turned out, but this time I tested my hypothesis that I was corresponding with a somewhat generous computer by complaining, but this time I sent out four separate complaints from each family member (each of whom was legitimately but subtly aggrieved in some way by flying United). The result? Four identical responses, each with a $500 voucher. As much as I appreciate the gesture on their part, I am discovering more and more to complain about on United…
    22 Jan 2013, 10:52 AM Reply Like
  • mrholty
    , contributor
    Comments (816) | Send Message
     
    Chris-

     

    I can speak to the process from working for one of the airlines that makes up United today. I haven't worked there for 5+ years and I didn't work in the area but I had a former employee become a supervisor in the area. I doubt much has changed.

     

    One usually receives a better response writing a formal letter vs an email. Internal company metrics measured response and resolution of emails vs regular mail differently so of course items suffered. Much of the emails were automated responses, physical not so much. All physical letters were entered into a database with ticket #, FF #, etc. The airlines does a poor job or relationships with family so you would be correct in individual letters. The reimbursement process is generally based on if there is any documentation in their file with you and your case will be helped if you use a specific employees name. First name works as most won't give you a full name, but if you can complain that Stacey the check-in agent did x it helps. Each employee also have limits that mgmt will generally sign off for without mgmt review and reimbursements for vouchers are much more freely given out vs cash as each cash is reviewed by mgmt. When I worked there only about 50% of the vouchers given were ever redeemed and with airlines having such high fixed costs the real incremental cost of that seat is pretty low.

     

    Also, Chris I expect that further complaints will be less successful as they track # of complaints per person or complaints per # of flights taken.

     

    Also, were you successful this past week?
    22 Jan 2013, 03:43 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Yes, this has been a busy and successful travel week. We did, however, pass up one bump opportunity and instead took a quick trip to the UK which I will be writing up shortly. We ended up lucking into a big snow storm in Europe, which ended up being a bit of a bonanza.
    22 Jan 2013, 03:53 PM Reply Like
  • mrholty
    , contributor
    Comments (816) | Send Message
     
    Best of luck to you.
    16 Jan 2013, 10:35 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (15457) | Send Message
     
    If I had a brain to actually do this full time, I would! I don't think I could keep everything straight but this is so cool!
    16 Jan 2013, 10:48 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Thanks. It is a fun game.
    16 Jan 2013, 11:23 PM Reply Like
  • mrholty
    , contributor
    Comments (816) | Send Message
     
    Chris-

     

    Nice article on free books and stuff. I used to use the US Mint to buy the $1 coins on my cc to get free miles. It was the only way that I knew of to get miles for cash. You could buy $10k worth a time. I would buy $10k, the US mint actually paid for shipping for a while as they wanted them in circulation they would get sent to me I would deposit it in my bank and repeat the process every couple of days. I was able to do this about 1-2 a month. I quit when they limited it to less but was able to take my wife on trip to NZ for a couple $ in taxes on free tickets.

     

    Didn't have the time to buy tickets hope you are successful. Jan a lite travelling month bus in the front and back so it may be tougher. A killing if it was June.
    17 Jan 2013, 12:14 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » June and July are great. I like your coin idea. Good for kids' allowances because they tend to like getting the coins.
    17 Jan 2013, 12:16 PM Reply Like
  • mrholty
    , contributor
    Comments (816) | Send Message
     
    I only kept a few for the kiddo's. I haven't checked recently but the mint I believe now charges for shipping and I think you can only buy $3k at a time. You can blame the WSJ for writing an article on how frequent flyers were getting around stuff.

     

    My 7 yo nephew got a $1 gold coin from me in with his card last year. He traded two of them to his 5 yo cousin for her $20 bill. To her two gold coins must be worth more than 1 ugly bill. He's got a future.
    17 Jan 2013, 12:31 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Sir, please have your nephew submit his resume to HR at Rangeley Capital in 2024. We will have a seat waiting for him.
    17 Jan 2013, 12:52 PM Reply Like
  • Squeeky Wheel
    , contributor
    Comments (297) | Send Message
     
    Just saw this post... bumps earned me a lot of travel in my college days. I don't remember how much, but it paid for all my 'for fun' flights. It really helped when schools would pay my travel, then I'd take a bump voucher...

     

    Next time you are flying via Singapore, drop me a note.
    31 Mar 2013, 12:10 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Nice. Will do.
    31 Mar 2013, 12:20 PM Reply Like
  • TravelerMSY
    , contributor
    Comments (2) | Send Message
     
    I'm assuming gaming the strikes only works in Europe since US airlines strike so rarely. And that the EU rules on passenger compensation are more generous so the offers for voluntary bumps are also more generous.

     

    The complaint strategy works but customer relationship tracking is foiling it. There were reports of one UA pax that was a serial complainer and was lifetime revenue negative due to vouchers.
    3 Apr 2013, 01:51 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Yes, the strikes tactic has (for me at least) always been European.

     

    I would love to know the name of the person you mentioned.

     

    Thanks for the note.
    3 Apr 2013, 07:18 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    So let me make sure I get this straight before I actually "buy" my next ticket.

     

    You book a flight that you expect will be overbooked, which is almost all "return flights to Hawaii" because I live on a tourism island.

     

    Then you call in on the day of the flight to see if it's overbooked, and if it is, cancel. If it isn't, they will offer to "bump you"? That's the part I'm kind of confused about, do they actually refund you everything and let you fly for free?

     

    Thanks Chris!

     

    BTW, I don't know if you drink Starbucks, but there's an arbitrage on that one as well. Might not be worth it, but it's fun to do.

     

    They have a reward program where they give you a free drink/food if you have 12 purchases (any purchase.) So you load up your gold card with 60 bucks, buy 12 gift cards 5$ each and keep them.

     

    Now you can use the reward the next time you go in and buy a drink for free, while at the same time dumping all the gift cards back into the gold card. And repeat and rinse! Hahaha!
    21 Jun 2013, 05:03 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » No, if they are overbooked, they will often offer a "bump". Typically it is cash, a free ticket, meals, and a hotel.

     

    I love the SBUX one. Thanks. And it is always worth it -C
    21 Jun 2013, 09:19 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Also, the record for SBUX cost per single drink is currently $47.30. I am heading to SBUX, taking my office, and ordering a Tenta reserve iced coffee (and requesting several extra cups), all to be paid for with me free coffee from the Wilson Wang SBUX arb. Thanks! -C

     

    PS, whenever you're next in town, would love to buy you a (free) coffee.
    1 Jul 2013, 01:10 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Let us know how it works! I just googled the most expensive SBUX drink and I was astonished! http://bit.ly/15bNL6h

     

    I will definitely visit you and take you up on that offer!
    1 Jul 2013, 04:38 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Yep, a free Trenta (sorry for previous misspelling) plus two extra cups served me plus two colleagues for free.
    1 Jul 2013, 04:43 PM Reply Like
  • Special Situations and Arbs
    , contributor
    Comments (538) | Send Message
     
    Wilson....I've never had a cup of coffee on my life and don't drink tea. But I love stud like your starbucks idea for the sport of it. I won't actually do it but would liek to know how it works. I'm not sure I fully get it (maybe because I've been to Starbucks maybe twice in my life).....nice job looking between the cracks!
    1 Jul 2013, 05:40 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Perhaps I'll write an insta blog about it.

     

    The basic idea is that you have to reach gold status first, which is you have to register a gift card at SBUX and purchase 30 items to reach the gold status. If you really wanted to max out this idea, you would buy the cheapest coffee or you could just keep buying gift cards until you hit 30 stars.

     

    After receiving gold status, you will accumulate stars for every purchase, any kind of purchase. So you then buy 12 gift cards $5 each and keep them. You can buy a lot more depending on how much you want to annoy the workers there. It would require two visits, so the second time you go in, the purchases should register and you can proceed to release all 12 back in store or online. Use the free drink reward and rinse and repeat.

     

    The only tedious part is the part where you have to purchase the 12 gift cards. But you can make up a good excuse like you have a billion relatives or what not. Cheers to arbitrage.

     

    P.S you can purchase food or drinks with the reward. So if someone really wanted to eat for free, he can just keep doing that and use the rewards to buy food.
    1 Jul 2013, 05:58 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Also, you can buy your SBUX card here:

     

    http://bit.ly/19PsRLw

     

    They go for a 12% discount.
    1 Jul 2013, 07:01 PM Reply Like
  • jaginger
    , contributor
    Comments (472) | Send Message
     
    I got the best of both worlds last night...volunteered for a bump on the last flight home, got my $400, and then got the seat when a guy didn't show at the last minute!

     

    They're not really supposed to do that, but being nice to folks never hurts your chances...
    21 Jun 2013, 05:08 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Hey jaginger,

     

    Can you explain how the bump works or how someone could exploit it, I'm going to try this ASAP!
    21 Jun 2013, 05:18 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » I love it. I like free money so much, that I would enjoy that far more than $400.
    21 Jun 2013, 09:20 PM Reply Like
  • bazooooka
    , contributor
    Comments (2350) | Send Message
     
    Wilson,

     

    If an airline overbooks they will ask for "volunteers" to give up their seat in an exchange for a later flight and a free flight voucher for the future (and/or cash or hotel stays sometimes included).

     

    To game the system you'd have to be pretty good and buying tickets on flights that are overbooked and also be good at being picked to be the "volunteer".

     

    Many times I've wanted to volunteer but others beat me to it (or were chosen instead). I don't think I'd buy a ticket just in hopes to get a bump since you could be left having to take the flight and/or stuck with a credit that has lots of restrictions if you were to not follow through with your flight.
    21 Jun 2013, 09:41 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Hi Bazooooka,

     

    Gotcha, but you still have to buy the original ticket right? They don't actually give you a refund or anything right?
    21 Jun 2013, 09:47 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » Yes, you pay for the ticket that you use (eventually). So it is a double, give or take, not a "x infinity"
    21 Jun 2013, 09:55 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Haha! Thanks Chris! Time to start the arbitrage.
    21 Jun 2013, 10:24 PM Reply Like
  • bazooooka
    , contributor
    Comments (2350) | Send Message
     
    Yes you pay for the original ticket. But if you're good at booking crowded flights, and get picked/bumped, then you'll find that you often can get a free RT anywhere in the US just for the inconvenience of converting your ticket into a later flight (hours later often; or next day at worst).

     

    I have a few times turned a $150 intrastate ticket (SF to LA 10pm flight) into a later flight (next morning) and free RT voucher that never expires. Since I didn't mind waiting till the next day to fly out it felt like a free $400 (est of what the voucher is worth) and a chance to check out the LA nightlife with my room paid for by someone else.

     

    Like most things, if you're relatively time - insensitive then you can really score. It works great when you're single and young and can travel light. Most people just want to get home but those who can wait till the next day can often get a free hotel and nice flight voucher for the inconvenience of staying at a Hilton for 12 hours give or take.
    21 Jun 2013, 11:01 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Thank you! I will try on my next purchase!
    22 Jun 2013, 02:38 AM Reply Like
  • jaginger
    , contributor
    Comments (472) | Send Message
     
    Wilson,
    Bazook explained the process pretty well. What was fortunate in my experience is that I got the $400, but ultimately got home on my original schedule.

     

    If you get *really* good a picking the right flights, it is possible to parlay indefinitely by starting with a cheap flight (say $150) that you get bumped from (collecting $400.)

     

    You then book another ~$150 flight (pocketing $250 of the $400 you just made) and get bumped again, get another $400. Repeat ad infinitum.

     

    This strategy is for the REALLY time insensitive, as it would take up quite a lot of your free time to do so. But it's been done (and done quite well), by those who choose to.

     

    Good luck!
    22 Jun 2013, 11:27 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    I will test it out in just a matter of days.

     

    Last question of concern, will they let me take a bump over the phone? Chris mentioned earlier in his comments that one would need a good frequent flyer status, so what if I don't have a good one. Would I need to actually go to the airport and what not?
    26 Jun 2013, 07:03 AM Reply Like
  • jaginger
    , contributor
    Comments (472) | Send Message
     
    From my experience you will almost certainly need to go to the airport. I believe Chris found a very special situation in being allowed to bump over the phone.
    26 Jun 2013, 07:35 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » I used another technique, mentioned elsewhere, to stockpile millions of frequent flier miles, which has helped in coordinating bumps.
    26 Jun 2013, 10:42 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    Oh buying US mint coins or anything that gives you a 1:1 trade.
    26 Jun 2013, 04:07 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Author’s reply » No, using airline credit cards to buy money markets and CDs.
    26 Jun 2013, 05:53 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (817) | Send Message
     
    You can do that??? Oh man oh man.
    26 Jun 2013, 05:55 PM Reply Like
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