The recent United Involuntarily Denied Boarding debacle with Dr. Dao got me thinking about IDB auctions. In current practice, when an airline is overbooked or needs seats, they will conduct an "auction" in which increasing amounts of airline specific "currency" (Delta Dollars, or the like) are offered in the hopes that someone will voluntarily give up their seat. Plenty of folks have offered their suggestions about how to make the auctions function better, but I haven't yet seen anyone suggest what seems like the most obvious solution: an auction that's conducted in a currency that the average traveler actually wants.
You see, most airline passengers don't travel all that often. If you fly once a year (or less!) then the opportunity to obtain $X in airline specific currency (that usually carries an expiration date of one year), is hardly compelling. Thus, the value of an offer of, say, $400 in credit on a particular airline carries a substantially discounted value to the average flier. If you have no realistic plans to fly in the next year, the value of the offer is effectively $0. There's a sizeable chance that a majority of your customers are automatically out of the "bidding" when an auction is conducted in this manner.
So, why not conduct the auction in good old cash? I understand that airline-specific credit is heavily discounted from the airline's perspective, but surely it has some cash value. Why not start the auction at a meal voucher, a seat on the next flight, and $50 cash. Now everyone is interested. Personally, I've turned down offers of $600 in airline credit when I might have taken $200 in cold hard cash.
The more I think of it, the more sense my proposal makes. Which means there must be an FAA regulation that forbids it!