Airlines routinely sell more seats than the aircraft holds. This is deliberate, longstanding and based on statistical modelling of how many booked passengers fail to appear.
Occasionally the model is wrong and everybody turns up, at which point somebody does not fly.
Why it happens
A meaningful proportion of booked passengers do not travel — missed connections, changed plans, illness, no-shows on flexible fares.
An aircraft flying with empty seats that were paid for and not occupied represents lost capacity, and airlines model the no-show rate by route, day and season and sell accordingly.
The modelling is generally accurate, which is why most people have never encountered this despite it happening on a large share of flights.
When it fails, the airline must reduce the number of passengers to the number of seats.
Voluntary versus involuntary
The distinction that determines everything about what follows.
Airlines first seek volunteers, offering compensation to passengers willing to take a later flight. This is a negotiation and the terms are whatever is agreed.
If insufficient volunteers come forward, passengers are denied boarding involuntarily, selected according to the airline's published criteria.
Involuntary denial triggers statutory compensation in many jurisdictions, at levels set by regulation rather than by the airline.
Volunteering forfeits that statutory entitlement in exchange for whatever was negotiated, which is why the negotiation matters.
The volunteer negotiation
Worth understanding because the opening offer is rarely the final one.
Airlines generally start low and increase if nobody accepts, which means the first announcement is a starting position.
What is worth establishing before accepting: the value and form of the compensation, whether it is a voucher with restrictions or something more usable, what the confirmed alternative flight is, and whether accommodation and meals are provided if the wait is overnight.
A voucher with an expiry, blackout dates and restrictions is worth considerably less than its face value, and this is frequently not volunteered.
Getting the confirmed alternative in writing before accepting is the step people skip and regret.
Who gets selected involuntarily
Criteria are published and generally consider fare paid, status, check-in time and connection implications.
Which means the passengers most likely to be denied are those on the cheapest fares, without status, who checked in last.
Certain categories are generally protected, including unaccompanied minors and passengers with disabilities.
Checking in early is the single most effective way to reduce the risk, which is a small effort with a real effect.
The statutory position
Which varies substantially by jurisdiction and by where the flight departs from.
Several regimes require compensation for involuntary denied boarding, calculated on distance or on fare, with amounts increasing according to the delay in reaching the destination.
Rerouting and care during the wait are frequently required in addition to compensation rather than instead of it.
The rules generally apply based on the departure point and sometimes the carrier's nationality, which means the same disruption on different routes produces different entitlements.
The authoritative source is the relevant regulator rather than the airline, and the airline is not always forthcoming about what is owed.
What is not overbooking
Worth distinguishing since the compensation differs.
Cancellations and delays are separate categories with their own rules.
Aircraft substitution to a smaller type produces the same practical outcome and is treated as denied boarding in most regimes.
And operational removals for weight, safety or crew reasons may be treated differently, which is a genuine complication and is worth checking rather than assuming.
What I actually do
Check in as early as possible, always, which is free and materially reduces the risk.
Volunteer only when the offer is genuinely good and the alternative flight is confirmed in writing.
Ask specifically about the form of compensation before accepting, since vouchers and cash are very different things.
And if denied involuntarily, request the statutory compensation explicitly and in writing, since it is frequently not offered proactively and the entitlement does not depend on asking politely.
The connection complication
Where denied boarding causes the most damage.
Compensation regimes generally calculate on the delay in reaching your final destination rather than the delay on the individual segment.
Which means a short delay on the first leg that causes a missed connection and a full day's delay overall is treated according to the full delay, and the entitlement is correspondingly larger.
That distinction is worth stating explicitly when claiming, since the initial offer is frequently calculated on the segment.
Getting it in writing
Whatever is agreed at the gate should be confirmed in writing before you leave the desk, including the compensation, the rebooked flight, and any accommodation or meal provision.
Verbal agreements made under time pressure are difficult to enforce afterwards, and the staff member who made them is not the person who will process the claim.
The claim afterwards
Where entitlement and payment diverge.
Compensation is frequently not paid automatically and requires a claim, submitted with the booking reference and evidence of the disruption.
Airlines sometimes offer vouchers in place of the statutory cash entitlement, and accepting one may waive the right to the cash.
Regulators publish complaint procedures where a carrier declines a valid claim, and third-party claim companies exist taking a percentage, which is worth avoiding if you are willing to submit it yourself.