On most modern airlines, flying standby occurs when a passenger travels on a flight without a prior reservation for that specific flight. There are four circumstances in which passengers typically fly standby. First, a missed flight may require a passenger to fly standby on the next flight to the same destination, as they now lack a reservation. Secondly, a passenger may arrive at the airport early (whether accidentally or on purpose) and wish to take an earlier flight listed for that day. They will then attempt to travel standby on the earlier flight, and failing that, proceed to take their booked flight. This is referred to in the industry as "go-show".
Standby can also occur for upgrades. Many airlines (particularly in the United States) give free space available domestic upgrades to First Class for their elite tier fliers. If first class sells out or upgrades full with higher-tiered passengers, elite fliers can standby for a first class seat, should one open up due to a cancellation, no-show, misconnect, irregular operations or an equipment change. If a passenger clears for an upgrade, they may be given new boarding passes at the gate. Some airlines, such as American and United, have gateside monitors that show the upgrade (as well as general) standby list, and will also announce when First Class checks in full (i.e., no further upgrades will be given).
In some cases, when a flight compartment is overbooked, an airline will designate all passengers who do not have a seat assignment as "standby" at some time prior to boarding.
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Airline employees and some of their family and friends may also travel standby, often at discounted fares or free of charge. They typically have lower priority than regular passengers and are only allocated a seat after all passengers paying a regular fare have been allocated seats. It can even occur that a passenger traveling standby is allowed to take their seat on the aircraft, only to then be asked to vacate it to make way for a regular passenger.
Travelers get themselves onto the standby list by speaking to a ticket agent or a gate agent. Almost always, this must occur in person at the airport, and not over the phone. When the flight is boarding, any unclaimed or available seats will be given to those passengers on the standby list, who must wait at the gate to be called. Any passengers on the list who are not given seats are rolled into the standby list for the next flight. Passengers on the standby list are typically given priority based on how much they paid for their tickets and their relative status in the airline's frequent flyer program.
A person who paid full fare will have higher priority than someone who purchased a 21-day advance fare. Some low-cost carriers, Southwest Airlines in particular, have policies that only allow full fares to standby. This means that if one purchased a discounted airfare, like a web-only fare or 14-day advance ticket, they would be ineligible to fly standby unless they upgraded their ticket to a full-fare (unless the original Southwest Airlines flight is delayed, in which case no upgrade would be necessary).
While standby for earlier flights began as a free service on many airlines, as of April 2010, most US airlines charge for unconfirmed standby, with a USD 50-75 fee being standard. Currently, United Airlines charges a USD 75 fee for standby travel to all passengers except passengers on full fare tickets, 1K passengers, Global Services passengers and premium cabin passengers. American Airlines restricts free standby to passengers who have elite status or fully refundable tickets, and charges a USD 75 fee for all other passengers who wish to secure a confirmed standby seat within 24 hours of their desired flight time. In all cases, distressed passengers (passengers whose flights have been cancelled, denied boarding, etc.) are given free standby and highest priority.
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References
Source of article : Wikipedia
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