How to position yourself to get compensation
Most travelers want to just fly and get to their destinations on time and without delay. Unfortunately, this is never a guaranteed situation. There are many others that are aware of their rights once the air company tries to fiddle with the rules to its advantage. Most, (but not all) companies overbook many of their flights. This is a common, if somewhat shoddy practice as what it means is that companies bet on the non-arrival of a
certain number of travelers. Usually they are correct in their analyses. If they are wrong, the result is breaking the contract between them and the random traveler who is denied boarding because the company overbooked the flight. This means the company should compensate the traveler who either volunteers to go on the next flight, or, in the absence of such volunteers, to compensate travelers who are denied boarding. The European commission has finally decided to regulate these issues, which are legally binding as of February 2005.
Here is what article 4 of the decree stipulates:
Denied boarding
1. When an operating air carrier reasonably expects to deny boarding on a flight, it shall first call for volunteers to surrender their reservations in exchange for benefits under conditions to be agreed between the passenger concerned and the perating air carrier. Volunteers shall be assisted in accordance with Article 8, such assistance being additional to the benefits mentioned in this paragraph.
2. If an insufficient number of volunteers comes forward to allow the remaining passengers with reservations to board the flight, the operating air carrier may then deny boarding to passengers against their will.
3. If boarding is denied to passengers against their will, the operating air carrier shall immediately compensate them in accordance with Article 7 and assist them in accordance
with Articles 8 and 9. Articles 7 and 8 are also of utmost interest to you:

Article 7
Right to compensation
1. Where reference is made to this Article, passengers shall receive compensation amounting to:(a) EUR 250 for all flights of 1500 kilometers or less; (b) EUR 400 for all intra-Community flights of more than 1500 kilometers, and for all other flights between 1500 and 3500 kilometers; (c) EUR 600 for all flights not falling under (a) or (b). In determining the distance, the basis shall be the last destination at which the denial of
boarding or cancellation will delay the passenger's arrival after the scheduled time.
2. When passengers are offered re-routing to their final destination on an alternative flight pursuant to Article 8, the arrival time of which does not exceed the scheduled arrival time of the flight originally booked (a) by two hours, in respect of all flights of 1500 kilometers or less; or (b) by three hours, in respect of all intra-Community flights of more than 1500 kilometers and for all other flights between 1500 and 3500 kilometers; or (c) by four hours, in respect of all flights not falling under (a) or (b), the operating air carrier may reduce the compensation provided for in paragraph 1 by 50%.
3. The compensation referred to in paragraph 1 shall be paid in cash, by electronic bank transfer, bank orders or bank cheques or, with the signed agreement of the passenger, in
travel vouchers and/or other services.
4. The distances given in paragraphs 1 and 2 shall be measured by the great circle route method.
Article 8
Right to reimbursement or re-routing
1. Where reference is made to this Article, passengers shall be offered the choice between: (a) - reimbursement within seven days, by the means provided for in Article 7(3), of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight is no longer serving any purpose in relation to the passenger's original travel plan, together with, when
relevant, - a return flight to the first point of departure, at the earliest opportunity; (b) re-routing, under comparable transport conditions, to their final destination at the earliest opportunity; or (c) re-routing, under comparable transport conditions, to their final destination at a later date at the passenger's convenience, subject to availability of seats.
2. Paragraph 1(a) shall also apply to passengers whose flights form part of a package, except for the right to reimbursement where such right arises under Directive 90/314/EEC.
3. When, in the case where a town, city or region is served by several airports, an operating air carrier offers a passenger a flight to an airport alternative to that for which the booking was made, the operating air carrier shall bear the cost of transferring the passenger from that alternative airport either to that for which the booking was made, or to another close-by destination agreed with the passenger. You can find the entire document at http://europa.eu.int/eur-lex/pri/en/oj/dat/2004/l_046/l_04620040217en00010007.pdf
The savviest travelers always announce their willingness to volunteer upon arrival at the check-in counter. If there is a need for volunteers, their names will be jotted down and they may be asked to give up their seat and take a later flight. For example, you can get 100$ just to be bumped to a flight that
leaves a couple of hours later. I saw a family of 5 traveling from Argentina to London via New York who, after arrival in NY, have volunteered to stay overnight in a hotel and fly the next day for the sum of 400$ to each of them– a nifty 2000$ plus a fun day in NY – not bad. If you want to maximize your chances of volunteering to stay overnight on an international flight, you need to do the following. First, arrive as early as possible. Most travelers show up between one to two hours
in advance, as is usually the rule.

You need to arrive as early as possible – in case the company seeks volunteers on a first come first served basis, then you will increase your chances by being one of the first on the list. As soon as you arrive, casually ask the low-ranking company employee who is in
charge of putting the waiting line in order whether the flight today is overbooked. Usually they will know and tell you, and even if they are not allowed to discuss such matters, you can detect by their facial expression whether this is the case. Try to plan to be serviced by a ticket agent that looks experienced, sometimes a novice ticket agent will not run you through the process of the volunteer wait list just because he or she is embarrassed to admit they do not know how to do it. As soon as you approach the ticket counter ask whether the flight is overbooked and announce that you are willing to volunteer. If you want to increase your chances even further and have where to spend the night, say that you do not need a hotel for the overnight stay – this will definitely bump you to the head of the list as the company saves the hotel expense with you. If the company really is in need of volunteers they will put you on the list, give you a boarding pass with a special hand-written code on it and mark your luggage so that it could be located and returned to you at the end of the day in case you really are
reassigned to the next day. Once this process is over you proceed like all passengers to the gate. If indeed there are not enough seats, the agent at the gate will start announcing names, with most passengers not even knowing who these people are and why they are being announced. Even if your name is not announced in the first round, go to the counter and hand in your ticket for the simple reason that some passengers who are on the list with you and whose name was just announced are busy shopping, or are in the bathroom
or just did not hear their names announced. In most cases the agent will not wait for them, but rather take your pass instead. Now you will be asked to go back to the ticket agent at the departure hall who will give you a travel voucher, a hotel voucher including meals. For example, Lufthansa gives each volunteer a travel voucher of 700 Euros on their daily flight from Los Angeles to Frankfurt or Munich in case it is overbooked. This travel voucher is good for one year and can be redeemed for 600 euros cash on the spot (in US dollars) or upon arrival in Germany, in cash in Euros at the airport’s
Lufthansa cashier. I recommend that you take the cash, even though you lose 100 euros of the voucher’s value: first, the voucher is like cash – if it is lost, the company will not replace it. Secondly, after one year it becomes worthless and thirdly, it can only be redeemed at Lufthansa which will sell you full-fare tickets, that is, the most expensive ones. It is best to give up
100 euros and take the cash. One more thing: as a token of gratitude to your volunteer spirit, ask the ticket agent to skip the lines the next day and approach the ticket agent immediately upon arrival. In most companies this is standard but the agents
are so busy they forget to tell you: after all, when you volunteer to stay overnight, you save the company money and you help the agents themselves a lot of energy in the ugly situation where they oblige a non volunteer passenger to give up their seat, so they owe you this little service.

How to maximize the value of the meal voucher
In case you receive a meal voucher from the airline because the flight was delayed or canceled do the following: Most passengers are happy to receive the voucher and hurry to the next pizza or burger stand and get a 5$ meal. The smart traveler will explore the entire terminal for the best restaurant he could find. He would then walk in, show the voucher and ask if the restaurant honors this voucher. If it does, and of course it will, he will then ask them for the maximum value of the voucher. He will then discover what the airline does not want him to know: the voucher may be worth 20$ and even up to 30$ depending on the class of his flight ticket. Bon-appetite.
15. You are stranded: how to get the best hotel and how to wine and dine at the expense of your air carrier In case you volunteer, do not disclose that you need a hotel room until after
the deal is done. Then – it is up to you to decide to go home, or get a hotel at the expense of the air company. So by all means volunteer if you wish to make a quick $$$ but only after confirming your new status say “oh, I will of course need a hotel room.” Be assertive and ask which hotels they can send you to. Those can vary from mediocre hotels to the top of the line luxury hotels. If there is a large number of passengers who volunteered like you, wait to be last and hope that they
run out of the cheaper hotels. If you have to stay overnight, you will also get a per diem with the hotel voucher, which allows you to eat at the hotel restaurant. The per diem is cumulative, that is, you can skip the breakfast and add its value to your dinner, ending up having a real luxury meal. Sometimes, there is no figure attached to the dinner which is a part of your
voucher. As soon as you go to dinner, ask at the reception desk to know the exact dollar value of your dinner voucher. If it has no maximum value attached to it, it means you can eat for any sum of money and of course the receptionist will be more than happy to let you know this. I have known travelers who then went on to spend over a hundred dollars on their dinner
and I have done this once myself.